When clients jump ship to an RIA competitor

Register now

The flow of assets and clients from wirehouses and brokerages to RIAs is one of the most intensely watched trends in the wealth management industry.

But what about the movement of clients and assets between RIAs?

“The RIA channel has grown at twice the pace of any other channel, and RIAs in the channel will compete more with each other,” says Alois Pirker, research director for the Aite Group’s wealth management practice. “There’s no question about it.”

This group increased their market share 5.4% from 2007 to 2015, the greatest surge of any channel and the only channel to gain every year, according to research by the Aite Group. Client assets in the independent RIA channel have soared 119% from $1.3 trillion in 2007 to $2.8 trillion in 2015.

As RIAs grab more market share, it’s only natural to assume that more clients will come not just from wirehouses or broker-dealers, but also from competitors.

“It’s a sign of the maturation of the industry,” Gail Graham, chief marketing officer of United Capital, says, adding that “some old-fashioned RIAs are getting left in the dust.”


Over the second half of 2015, 20% of new RIA clients came from other RIAs, according to TD Ameritrade. That number more than doubles to 47% when the firms have more than $250 million in assets under management.

Is this impacting how firms approach marketing and attract new clients?

The answer is yes, according to advisers, marketers and other industry observers, but there are many factors to consider.

Location is a major factor, Pirker says, because the market tends to be concentrated in certain classic wealth centers such as New York, San Francisco, Chicago and Los Angeles. In those places, many RIAs are already finding themselves competing for similar clients based on geography alone, he says.

“The danger there is that you get lost in the noise. People have trouble telling one from the other.” – John Anderson, managing director, SEI Advisor Network

The size of a firm is probably the most significant factor.

“We see a growth differential in RIAs,” Pirker says. Some firms are able to grow faster through leveraging technologies and successful mergers and acquisitions, he says, but many smaller firms will not be able to do that.

“The fastest-growing demographic within the space will certainly receive a good chunk of accounts from other RIAs,” he predicts, adding that “it’s not an equal playing field.” Cost-conscious advisers might not be able to invest in improvements to aid future growth, he says.

“I think that will lead to concentration,” Pirker says. “You’ll see an ‘80/20’ type of space, where 20% is actively pushing and growing, while the other 80% is sitting under $100 million in assets and shying away from paying for better platforms and more efficiency, feeling that they don’t need to grow any further, while those 20% get bigger and will swallow up more of the market.”


Size is a big advantage because the economies of scale can be essential for investing in technology and professional marketing. While many smaller firms cannot afford such extras, some are already tapping into those services via affiliations with larger firms.

Yet size is only one factor and it can be “a double-edged sword,” says John Anderson, managing director, practice management solutions for the SEI Advisor Network.

Larger firms with marketing budgets tend to be broader in their messaging, Anderson says. “The danger there is that you get lost in the noise. People have trouble telling one from the other, because they typically all say the same thing the bigger they get.”

The strength of smaller firms is that they can be more focused and specialized.

“The bigger you get, the broader you tend to have to be with your services,” Anderson explains. “If you look at a $2 billion or $3 billion RIA, they’re trying to be everything to everybody. If it’s up to the $750 million range, it’s still small enough to be nimble and to be more focused on a niche, and that focus is great for differentiating yourself.”

RIAs, say advocates, can more finely tune themselves than brokerages to serve niches, which might be defined by geography, industry or even a specific company.

That’s the case for Diversified Financial Consultants, a Delaware-based RIA. The firm, which has assets of some $350 million, has developed an expertise in working with DuPont executives.


DFP partner Andrew Rosen said he has fielded many calls from clients and prospects about a DuPont pension plan, an issue with which his firm is intimately familiar. It’s a niche he owns.

“We have another arrow in our quiver,” Rosen says. “We’re not only doing holistic advice, but we have a leg up in knowing our client’s business, their industry, even their 401ks.”

That kind of very specific experience also colors hiring and recruiting, as well as merger activity.

“It’s an interesting fraternity – there’s a respect level among RIAs that’s very different than a bunch of advisers in a wirehouse” says recruiter Ryan Shanks, who estimates that three-quarters of his services involve RIAs.

Industry evolution: What's next for RIAs?
As the industry shifts in response to developments in the regulatory and technological space, what can advisers expect? Here are ten takeaways from a new Schwab study.

Shanks says he is acutely aware of firms’ distinct personalities.

“If I come across a firm I respect, and you’re an adviser working with that firm, it’s almost a prequalification,” Shanks says.

Indeed, among RIAs, competition for adviser talent might be more direct than competition for their clients, and most insist it’s not about poaching clients.

“We do not target other RIAs,” United Capital’s Graham says. “We don’t think like that. I don’t know anyone who has a singular strategy of poaching from other RIAs, but we all do compete for clients.”

That competition is tougher for a number of reasons, Graham says.


First, since most RIAs offer investment advice, holistic planning and fiduciary responsibility, those features have now all become clients’ baseline expectations.

“They’re the table stakes,” Graham says. “It gets you in the door, but it’s not a big differentiator anymore and it doesn’t actually get you the client.”

At the same time, she says, almost every channel of the wealth management business has taken on the trappings of RIAs.

“The name on the door could be, wealth management from a private bank, or an RIA, or Merrill Lynch or Morgan Stanley – any one of those models can be effective for a client, or not effective,” Graham says. “There’s no guarantee that an RIA will be better than the other models. Within the RIA world, where we used to be able to say, ‘I’m an RIA, and that makes me better because I do wealth management,’ that’s just not true anymore.”

Graham says that the key to an RIA’s marketing success is making sure that the approach is personal, specific and clear. She takes her cues from broader consumer marketing trends.

One of those trends, she says, is that people are demanding accessible technology.

She says that many “old-fashioned” RIAs insist on face-to-face meetings and do not use a lot of videoconferencing. Though that is changing as some smaller advisers have embraced video, realizing it is a necessity to better compete in a changing RIA world.

Despite intensifying competition within the channel, most RIAs see focusing on client satisfaction and differentiation as recipes for success, rather than luring clients from other firms.

“We’re not looking at other RIAs and asking, ‘how are we going to get their clients’ at all,” says J.P. Simmons, director of practice management for the Oxford Financial Group.

In fact, Simmons says that Oxford’s strategy embraces working well with other RIAs for the best outcomes for clients.

“We don’t really see ourselves as replacing any RIAs as much as being complementary to them,” he explains. “We have a lot of RIAs that work with us. We receive and give referrals to them as well, when appropriate. If we’re not a good fit for somebody, we would be more than willing to recommend another RIA.”

However, he adds: “We probably wouldn’t recommend another delivery channel.”

For reprint and licensing requests for this article, click here.
RIAs Wirehouses Practice management Wealth management Client acquisition Client retention Marketing Alois Pirker Gail Graham John Andersen J.P. Simmons Andrew Rosen Ryan Shanks Aite Group United Capital SEI Advisor Network Diversified Financial Consultants Oxford Financial Group TD Ameritrade