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RIAs Are Least Dependent on Value-Add Support: Survey

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The fastest growing segment of the financial advisor market is also the segment least dependent on outside support from asset managers, insurance companies and broker-dealers.  That’s just one of many findings from Practical Perspectives’ latest survey on “Value Add Support to Financial Advisors.”

The survey found that more than 7 in 10 advisors rely on what Practical Perspectives terms “value-add support,” and these resources are having a growing influence on the products and services that advisors use, but “RIAs stand apart” from this trend. Fewer RIAs are heavily reliant on outside support, and many don’t use any support from insurance providers, according to the survey.

Overall, advisors favor client-approved materials and economic or market-related forecasts, outlooks and commentaries; materials that are unbiased and objective; educational rather than product-driven; and designed for client interaction rather than in-house use, according to the survey.

But the use of value-add products and services differ across channels and direction.  For example, RIAs are also much less likely to view in-person office visits, conferences or offsite meetings, or client sponsored-events as very useful. They are more focused on their internal needs rather than having a client-facing component.

That’s not the case for wirehouse advisors, who tend to favor in-person visits, or regional advisors, who tend to prefer favor off-site meetings and conferences. More than two-thirds of wirehouse and regional advisors are focused on “client-facing value” programs and tools. In contrast, independent advisors—as well as RIAs – find technology tools useful.

“Support needs vary, with RIAs and independent advisors being distinct in many cases relative to more traditional wirehouse and regional practitioners,” according to the report.

RIAs find white papers, thought leadership pieces and economic-oriented commentaries or outlooks most useful, while wirehouse advisors prefer sales ideas and seminars and regional and independent advisors prefer due diligence meetings and product training.

RIAs also appear to be using outside resources less now than in the past. Four in 10 RIAs indicate that they have little or no reliance on value-add support, down from more than 6 in 10 RIAs in prior research, according to the report. Regional advisors are most reliant on value-add support.

Overall, however, 71% of advisors say they somewhat or heavily on outside resources, and 83% say they have a positive impact on their practice.

American Funds is the most popular provider of support, followed by BlackRock and JPMorgan, but here, too, the preferences vary across channels.  BlackRock leads among providers for wirehouse advisors, American Funds among regional advisors and independents, and Charles Schwab among RIAs.

Looking ahead, advisors anticipate that over the next 12-24 months these key areas will lead their use of outside resources: generating client referrals and attracting new business; helping clients develop a vision of life in retirement, including collecting Social Security benefits; and generating income in a continued low-rate environment while also preparing for rate increases.

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