4 Steps Fast-Growing RIAs Need to Take Today

RIAs represent the fastest-growing category in the U.S. wealth management market since 2016, according to McKinsey and Company. More than 1,600 advisors are joining the RIA industry annually, while 700 independent RIA firms are started each year.

Surprisingly, despite all this growth, many of the emerging firms seem remarkably similar, and their differences are difficult to discern. It’s not easy to create something new and truly different, but based on my own experience, I know it can be done.

Ten years ago, I set out with a group of highly experienced like-minded financial services pros to create a “partnership” where all of us felt involved — leadership, management, advisors and support.

We were all deeply committed and collectively made professional and personal sacrifices to make our vision a reality. We established a positive culture where everyone is a partner and knows their voices are heard. This has allowed us to be in this boat together and row collectively in the same direction.

Grow Without Losing Money

As growth is a necessary part of success, so is the ability to carve out responsibility and empower local leaders to grow their respective markets and/or departments. With everyone vested in the success of the partnership, growth strategies and ethical standards become embedded in the overall plan.

It also becomes apparent that “what brought you here may not always take you there.” You will need to explore new business lines and revenue streams and listen to what your prospects need that you may not be currently offering.

It is also crucial to monitor the risk the partnership may be taking in the name of growth. New or additional risk must never interfere with the successful foundation you have built.

It also cannot be emphasized enough that your P&L must always be managed carefully and aligned with your growth plan.

All too often, firms, companies and partnerships are growing so fast that they feel “losses” are necessary for these levels to be maintained. If you have people who are all driving toward the same goal and have different areas of focus, then you will be able to limit the loss side of this equation.

When to Consider Outside Capital

If you are fortunate enough to become one of the “fastest-growing companies” and/or “best places to work” in your respective sector, you will need to look beyond the initial goals and thresholds set at the launch of your firm or partnership. There will be phases of your partnership’s evolution that are necessary to step up your growth model.

Here are four very important considerations to understand when these phases present themselves:

1. Have the talent/know-how ready, willing and able to take on a new level of company development. You may have to recruit some of this talent or redirect existing leadership for this next phase.

2. Be in a position where you can explore an outside investment. If you “need” capital to grow or survive, you lose control of your company’s future. Be in a good position to choose your investment partner for what you are aiming to do next.

3. Educate yourself and others on the leadership team about the types of investments or opportunities that exist. Even if you do not believe you will take an opportunity, hear what is being offered and understand how deals are engineered.

4. Review different types and structures of capital providers. There are many factors to consider when outside investors become a part of your investment — such as minority versus majority interest, control, budget, put rights (forced liquidity) and waterfall events, just to name a few. Strategically, different capital providers can make more sense depending on what phase of growth your company is in.

Not all goals and plans will remain the same over the years. However, it’s imperative that the people, culture and core values you use to create your foundation stay consistent.

Your company or firm may end up looking much different from how it did five, 10 or even 20 years ago, but the intended objective should always be based on the original blueprint.

Jim Gold is the co-founder and CEO of Steward Partners Global Advisory, one of the industry’s fastest-growing RIA and broker-dealer firms since its launch in 2013. 

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