RIA: Advisor Networks and Alliances

When it comes to ensuring an advisory firm’s long-term relevance, there’s a business-model learning curve that still has to be addressed by many advisers.

In conversations with advisers, I often hear they cannot articulate the difference between what Resources does as a provider of back-office services and solutions, what an aggregator firm does, or what a strategic acquirer does. They tend to lump us all together as ‘aggregators.’ That’s true in a sense, but it misses the point that the models and opportunities for growth are very different.

There are three main models of aggregators in the marketplace for independent financial advisors right now: 

1- Strategic Acquirers - which buy RIA firms outright and merge the practice into a large and established financial services or employee benefits organization.

2 - RIA Aggregators - broad camp of acquirers that can help RIAs evolve their practices for the long term are the true aggregators.

3 - Adviser Networks and Alliances - made up of independent practices that want to remain that way but are concerned about their competitors’ increasing growth and sophistication. 

Resources Investment Advisors is in the third category, we’re here to support those independent advisers who know that more and more services are being demanded by the end clients—by participants and plan sponsors. 

For adviser teams to be able to keep up with that kind of demand at the same time they’re seeing margin compression, they have to have some kind of scalable support.
It’ll be a matter of survival.

Vinces Blog Post

We have positioned ourselves as a niche player that can provide an interim step prior to considering selling the practice to a strategic acquirer or an aggregator. Working with a firm such as ours, you can get access to the sorts of client solutions that the main competitors in the marketplace will have. We also put together a succession plan that means we’re there to back you up in case something unexpected happens. Independent RIAs that want to remain independent find this combination very attractive.

We support 28 different brands in the advisory marketplace, and they have no problem remaining unique and pursuing their own specific value propositions. If you think about it, independent broker/dealers [B/Ds] such as an LPL or a Raymond James have been doing this sort of thing forever—running in the background supporting advisory businesses. What we’re trying to do is to provide this kind of support but to do it from the RIA perspective, rather than from the broker/dealer perspective.

Where is the industry heading?

I think we’ll end up in a barbell situation as an industry. We’ll still have some of the smallest shops that haven’t made the national stage that still have fully independent, niche retirement practices. They may be able to survive based on the strength of their local key relationships. That’s probably the only part of the market that could be somewhat insulated from the scale pressure, given those very personalized relationships.

Middle-of-the-road advisers will likely face the biggest issues about remaining competitive while staying independent. I’m thinking about the midsize shop that maybe won an RFP [request for proposals] against some nonspecialist competition five years ago, but now the next round of RFPs is coming, and this time it’s going to be competing directly with the national players or with another local shop now tied into a national player. I expect you’ll see the middle-of-the-road firms accumulated or merged.

Source: An Array of Models. planadvisor. July/August 2019

Vincent Morris on August 14th, 2019

Posted by Vincent Morris

Vince Morris is a founder of Bukaty Companies Financial Services and Resources Investment Advisors, bringing more than 22 years of industry experience and a lifetime passion for investments and helping people with financial literacy to the firm. As a nationally recognized leader in the field of retirement plans for companies and their executives, Vince has been a valuable resource for other successful entrepreneurs. He has extensive experience in asset management and fiduciary duties pertaining to offering retirement plans. Additionally, he serves on the NAPA Government Affairs Committee and supports the industry PAC.

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