Invesco Global Consulting Learn how to succeed from the best

The challenge: Grow your business

Registered Investment Advisors (RIAs) looking to grow their businesses must in our view better understand the key drivers of success and translate that knowledge into actionable strategies. Many RIAs learn through peer experiences, industry conferences, and best practice research. But effective implementation may be a challenge.

Our solution: Learn how to succeed

Work to move from theory to execution with the help of Invesco Global Consulting. Our goal is to help you bridge the gap with comprehensive research, tailored consulting, and practical tools. Our latest report, based on the PII, offers data-driven insights into the best practices of top-performing financial professionals.¹ We examined 2,385 financial professionals including 252 RIAs (both hybrid and independent) with the goal of finding characteristics common to your most successful peers.²

Leveraging these insights, RIAs have an opportunity to learn how to grow and succeed with confidence and discipline. Here are some of the questions we cover in the report.

What is the distribution of your practice's client assets by product type?

According to the PII, RIAs turn to exchange-traded funds (ETFs) more than any other asset. Over a third of advisors’ client assets reside in ETFs (35.6%) as compared to mutual funds (24.5%) and individual equities (12.5%).³ ETFs have proved popular across quartiles too, with all PII respondents putting a sizeable portion of client assets (>21%) in the category.⁴ Versatility may be one reason RIAs find them so attractive. A vast array of ETFs may match the diversification and customization needs of virtually any client. Shares are often available and can generally be bought and sold any time during the trading day. ETFs also historically tend to be more cost and tax efficient.

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What percentage of your clients currently leverage model portfolios?

A model portfolio combines various asset types with the goal of giving investors a calibrated balance of risk and potential return. According to the PII, RIAs rely on them to match their clients’ risk tolerance and growth expectations. Close to 60% of RIAs (58.5%) use models for most of their clients (60+%), with some created in-house and others outsourced to a specialist.³ A model practice may help financial professionals centralize due diligence and streamline portfolio construction, while maintaining their investment philosophy. RIAs may have an opportunity focus more on client-centric tasks that support their more holistic guidance and retain enough portfolio control to keep a client’s experience personal.

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What are your practice's average assets under management per client?

According to the PII, RIAs have, on average, 120 clients per wealth manager, fewer than top-quartile practices. Average assets under management (AUM) for more than half of RIAs (50.4%) falls below $2 million. For another third (30.4%), it sits between $2 million and $5 million.³ We have seen that certain core clients may contribute more to the bottom line than others, and their leaving imposes a greater hardship on a practice. Losing an important client may stem from a subpar relationship rather than poor performance. An RIA may be able to fix this or prevent it from even becoming an issue. Invesco’s “golden hour” approach implores financial professionals to prioritize personal contact, pursue concerns, and know what critical clients want; make them feel seen and understood.

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Who within your practice receives career development and training?

We believe team members can be a practice’s most significant asset. Your team helps provide the services that clients likely value. Yet barely more than half of RIA PII respondents (56.3%) offer them any sort of career development training. And many of the practices that offer training limit it to wealth managers.³ Developing staff presents challenges, but we have seen that intentional processes and engagement may help ease the strain. Establishing clear career paths and investing in staff programs may help attract and retain talent and equip teams to meet the evolving needs of clients. Crafting a winning people strategy may help your firm readily innovate, adapt, and achieve success.

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What best describes your practice's long-term succession plan?

In our observation, the RIA channel has experienced impressive growth over the last five years. The trend seems poised to continue. While the future may appear bright, much of the industry in our view remains blind to one important aspect. According to the PII, almost half of RIAs (48.1%) haven’t identified a successor.³ A changing of the guard is likely coming eventually whether a firm is prepared or not. Formalizing a succession plan earlier on may help create capacity, establish continuity, and prepare for the business’s future transition. That includes integrating successors into client relationships. Integration may help promote client trust and may help promote retention.

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Our program: Turn insights into results

A financial professional’s success in our view often depends on knowing and then doing. Are you ready to turn these insights into results for your practice? Contact your Invesco Market Leader today. They’ll work to help you complete the Practice Innovation Index, implement its strategies, and accelerate your growth.

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