What sets top-performing RIAs and fee-based advisors apart from the competition? Nationwide Advisory Solutions’ fifth annual Advisor Authority study, released Monday, took a look.
“Year over year, Advisor Authority has shown that the RIAs and fee-based advisors poised to succeed in the face of increasing competition and the complex dynamics of today’s uncertain world are those who can differentiate themselves by adopting new technology, adapting to new trends and — perhaps most importantly — putting clients first,” Craig Hawley, head of Nationwide Advisory Solutions, said in a statement.
The study’s findings were based on an online survey conducted by The Harris Poll from Feb. 15 to March 4 among 507 RIAs, 514 broker-dealers and 824 adult investors.
Highly successful advisors have exhibited seven traits year in and year out to earn more money and manage more assets, the study findings showed.
It defined successful advisors as those who earn a personal annual income of $500,000 or more from their advisory business, or individually have $250 million or more of assets under management.
Nationwide said RIAs and fee-based advisors could start to create their own competitive advantage and forge their own path to greater success by focusing on the following four of the seven traits of successful advisors identified in the report.
1. Stay one step ahead. Year over year, RIAs and fee-based advisors insist that the push for new clients is the top driver for staying competitive. Successful advisors, in contrast, have stayed a step ahead of the competition and diversified by consistently relying less on adding new clients than all other advisors (37% versus 46%) and consistently adding new technology (27% vs. 25%), consolidating technology (21% vs. 15%) and adding new hires (22% vs. 11%).
2. Be a tech innovator. Successful advisors recognize the value of adopting new technology. Forty-one percent integrate artificial intelligence, and 26% integrate robo-advisors into their practice, compared with 27% and 17% of all other advisors. Successful advisors are also somewhat likelier than all other advisors to integrate interactive websites and/or client portals, mobile websites and/or mobile apps, tax optimization tools and account aggregation systems.
They use technology to transform the entire customer experience, from the front end to the back office, opening the door to a new category of client, offering a new universe of products and solutions — and ultimately gaining an edge over the competition.
3. Put clients first. Aligning with clients’ best interest is the foundation for a thriving practice, starting with a fiduciary standard. While the Labor Department, the Securities and Exchange Commission and various states have been engaged in their own definition of best interest, and implemented their own version of a fiduciary standard, 82% of successful advisors agree that there should be one federal fiduciary standard across the financial industry, compared with 74% of all other advisors.
4. Commit to an exceptional customer experience. Successful advisors leverage technology to create exceptional experiences for their clients. In 2019, 35% of successful advisors said technology helped them free up more time to focus on one-on-one relationships with their clients, versus 28% of all other advisors. Thirty-three percent used technology to protect clients against market risk, versus 26%, and 29% provided clients with more holistic planning, versus 25%.
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