In the increasingly crowded registered investment advisor space, some RIAs are behaving like allies, not competing rivals: They’re white-labeling robo-advisors for other RIAs to use to attract clients seeking digital advice.
The tech-savvy RIAs who create the robos, which are then sold under the buying advisor’s brand name, are attaining economy of scale, while expanding into new markets. “They’re competing with Schwab,” Julie Cooling, founder-CEO of RIA Database and RIA Channel, argues in an interview with ThinkAdvisor.
Once a boutique niche of financial services, the RIA segment has become “a powerful, driving force in the investment advice arena,” and sophisticated RIAs “are a force to be reckoned with,” Cooling says.
Though she has never herself been an RIA, Cooling, 46, lives and breathes RIAs. Well, that’s a bit dramatic. Let’s just say that, in helming her two companies, she is wholly immersed in tracking the investment advisor world (though she did find time to complete an Ironman triathlon).
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RIA Channel, a media company, produces 150 live webcasts a year in which Cooling interviews investment managers about investments — not about practice management, she stresses. The firm, which also compiles Forbes’ Top RIA lists, is the largest investment webcast-provider in the industry, she says.
RIA Database maintains detailed profiles of more than 1 million financial advisors across all channels, including BDs and family offices.
In the interview, Cooling discusses the changing RIA fee structure. And before scolding the financial industry for its disclosure-system “baloney,” she serves up her long-term forecast for the investment advisor space.
She has been in the financial arena since 1994, and early on, she mainly created and sold products at SEI Investments, Montgomery Asset Management and Forward Funds. Subsequently, she launched two successive companies of her own — both flops, she does not hesitate to point out — before opening RIA Database in 2005.
ThinkAdvisor recently spoke with the Forbes contributor, on the phone from her office in Charlotte, North Carolina. Here are highlights of our conversation:
THINKADVISOR: How has the RIA space changed since you founded RIA Database 13 years ago?
JULIE COOLING: There are more larger, sophisticated RIA firms, and they’re a force to be reckoned with. They’re offering a more holistic, comprehensive approach to wealth management. The RIA channel used to be looked at as a boutique-y area of the market. Now it’s a powerful, driving force in the investment advice arena.
Is the RIA space still the fastest growing?
In terms of assets, absolutely [$2.237 trillion AUM in 2017, according to RIA Channel]. There’s a lot of consolidation going on. M&A activity is continuing, for sure, because of the commoditization of asset management, especially with the proliferation of ETFs.
What’s the main attraction to becoming an RIA?
You can own your own firm. And when you own your own firm, you own your future — and you own your value.
What’s the strongest trend among RIAs?
[Many] advisors are sharing information with one another and relying on one another for specialization. If they’ve become experts in a specific area, such as technology, they can get better scale by selling it to other advisors.
Are there eager buyers?
More and more firms are learning that they need to outsource things they’re not experts in and focus on what they are experts in. They’re concentrating on building their product around the client versus trying to get clients to buy their products.
What sort of technology are RIAs selling to other advisors?
Some who have created their own robos are white-labeling them for other RIAs to use because they’ve become experts in that technology, methodology or platform.
Any examples of RIAs that are doing that?