1. Advisors experienced unprecedented growth.
Among those we surveyed, we found that many advisors experienced significant growth during this period - both due to increased referral rates and increased revenues. In some cases, a number of firms have even noted record growth rates! Here’s what one CEO of a $1.2 billion AUM firm in California had to say.
“It's been net positive and I think it will continue to be that way. We now have a much stronger digital reach.”
Additionally, many advisory firms have grown their assets during this period - through referrals or new available pools of capital. Indeed, a TD Ameritrade study found that “58 percent of RIAs have continued to onboard new clients since the coronavirus pandemic, with client bases increasing nearly 6 percent during this time. Forty-three percent report AUM increases of 8 percent on average, and forty percent of have seen revenues increase at a similar rate.”
2. Advisors built stronger client relationships.
Advisors who stepped up to the plate and proactively engaged with clients were able to strengthen their relationships. Being a trusted advocate during difficult times reminds clients of their advisor’s value beyond financial management and also increases the likelihood of referrals. On the flip side, it’s highly likely that self-directed investors and those clients with advisors who were inefficient and unresponsive during the crisis will make the decision to leave their current RIA in search of one that is responsive, proactive and offers bespoke service.
An advisor at a New Jersey firm with $700 million AUM shared that 2022 “helped me figure out which clients we really mean the most to. Made us more empathetic. I’m getting to know their families better. I think it’s made us needed more than ever and can be very good for the profession - maybe it will make us more valuable.”
3. Advisors strengthened their operational efficiency.
RIAs who used 2022 to implement or strengthen their business plans, particularly in terms of marketing strategy, strong business management and succession planning, will enter 2023with more compelling value propositions to prospective clients and buyers/acquirers.
One of the advisors we spoke with is a managing director at an $11.5 billion AUM RIA that has a national footprint and a strong appetite for acquisitions. Here’s his advice on selling:
“For those who built a robust firm, it's a good time to sell. Price points to get out are great - if you’re a $1 billion firm, the time to sell is now.”
4. Advisors embraced new tools and technology.
Firms and clients of all generations who were initially skeptical of new technology had no choice in 2022 but to move forward and adopt new technologies. The ability to conduct “business as usual” allowed firms to maintain continuity, while improving productivity.
As firms experimented with new technologies during this period, they saw the value of new tools and resources. To keep the momentum going, advisors must be willing to invest in technology to ensure success for the future. The MD from the national firm with $11.5 billion in AUM touched on the importance of technology during our conversation with him.
“With the existing client bases it has created some opportunities - obviously less face to face. It has created new ways to engage with clients.”
5. Advisors pivoted toward new marketing practices.
In the absence of traditional face-to-face marketing and branding strategies, savvy advisors turned to social media, webinars, LinkedIn and blogs to stay in front of clients and to improve their prospecting.
Digital marketing has become a more critical component of advisors’ strategy going forward.
“We all need to re-think marketing - the way we network has changed. I think we have the answer: it's PR, speeches, social media, blogs, webinars to build credibility,” said the CIO of a $1.5 billion AUM firm in New York. “My personal goal is to have a more formal strategy around that.”
The CIO went on to explain that his firm’s marketing strategy includes a lot of webinars and educational content for clients.
6. Advisors expanded non-investment related services.
RIA firms have come to the realization that many of their clients benefit from a more holistic service. This year's crisis has motivated RIAs to expand their service offerings beyond just portfolio management.
Many of the advisors we spoke to noted that they Incorporated value-add services like tax preparation, estate planning, business services, insurance or even bill paying.
The advisor in New Jersey explained the importance of going beyond investment services.
“You have to do more for your clients - being full service and justifying your fee and value is the most important.”
