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Practice Management > Building Your Business

Don’t Call Us an RIA. No Offense.  

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What You Need to Know

  • There's nothing wrong with RIAs, but there is a real opportunity for independent financial firms to do it a different way.
  • Wealth management firms are being pushed to focus on developing their tech platforms to meet clients where they are.
  • To provide a holistic wealth planning experience for your clients, it’s imperative that you have all the capabilities in-house to meet any of their needs.

It’s no secret that robo-advisors, do-it-yourself investing platforms, and financial technology players are disrupting wealth management as we know it. Some feel threatened by this.

Factor in fee compression, rapid consolidation and the number of advisors aging out of the industry, and it is understandable that old-school money management firms would be tempted to make knee-jerk decisions, looking to accumulate enough assets to obtain a suitable multiple and sell to any number of aggregators looking to gobble them up … only to be acquired themselves down the road. The path of least resistance.

There is no shame in selling your advisory firm. No blame can be placed upon those looking for the exits and the financial reward that comes along with it. The M&A space in financial services has never been hotter. And yet, there is a real opportunity here for independent financial firms to do it a different way — a new way.

I left J.P. Morgan in 2016, and when I started Manhattan West I was welcomed to the realm of the “independent RIA.” It was a fresh start, and we soon got our sea legs and began to grow and adapt to this new world.

But truth be told, we never liked being labeled an RIA. Frankly, we feel it puts us in a box and represents only one element of what we’re building. The RIA segment of financial services has been growing at a blistering pace for almost two decades — and to be clear, there is nothing wrong with being an RIA. In fact, it is something to be proud of.

It just doesn’t quite do us justice.

Candidly, it is not a differentiator to have access to the best asset managers. It is not a differentiator to simply provide access to alternative investments. Nor is it a differentiator to provide concierge-style services to your clients. Modern investment firms offer all of this, and more.

So, what does the next generation of wealth management firms look like?

Fintech First, Digital First

The on-demand nature of today’s investor is going to push wealth management firms to focus on developing their own tech platforms to meet clients where they are, and how they communicate. There’s a reason why Cash App, Venmo and Robinhood are among the most downloaded finance apps. The desire for real-time engagement with investments and finances is in its relative infancy. These are apps designed to cut the middleman out of the operation. Do you want to be left behind?

Offering your clients an app or platform to view and interact with their financial life in a meaningful way will make your client relationships stronger. Of course, there will be times to sit down and meet about their investments, their financial plan and the other services you provide, but leading with a digital channel will enable you to stay top of mind in today’s mobile-first world.

Vertically Integrated

To provide a holistic wealth planning experience for your clients, it’s imperative that you have all the capabilities in-house to meet any of their needs. Whether it be in the form of tax and legal services or investments, wouldn’t you prefer to manage your clients’ financial lives under your roof over having them work with outside vendors or competing firms? 

Not only are you showing your clients that you understand and are able to serve all of their financial needs, but it will also give you complete control over their outcomes. Firms that take their private wealth management offering to the next level will not only offer better diversification options, but will also keep their clients engaged in more ways than their financial plans and investment performance.

Top-Tier Talent

People buy people — it’s that simple. That’s why I truly believe when you are constructing your team, you must look for people who are deeply intelligent, highly educated and experienced in their roles, from a variety of backgrounds. When you are onboarding new clients, a key focus of that conversation will be trust. The collective experience of your team will be a major influence on your ability to earn that trust.

Instead of building and expanding a firm that’s much the same as others in your city or in your niche, launch one that’s “undisruptable,” one that’s built for the next generation of investor and will attract high-caliber team members that will help you scale your growth. There is nothing wrong with RIAs — just don’t call us one.

Lorenzo Esparza is the CEO and founding principal at Manhattan West, a modern version of an investment firm that provides a vertically integrated platform of services and investments to high-net-worth clients.


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