The world of wealth management is evolving, and with it, the strategies employed by registered investment advisor (RIA) leaders to drive organic growth. At the recent Wealth Management EDGE conference, a panel of industry experts shared their insights on how they've achieved success in a competitive market.
The Importance of Organic Growth
Gary Roth, co-CEO of Modern Wealth, highlighted a concerning trend: many individual RIAs are stagnant, with little to no growth over the past decade. He believes that building dedicated client prospecting teams and implementing niche marketing strategies are key to reversing this trend.
Centralizing Functions for Advisor Success
Roth and Kay Lynn Mayhue, President of Merit Financial Advisor, emphasized the importance of taking the burden of client acquisition off advisors' shoulders. By centralizing key functions and creating dedicated growth hubs, advisors can focus on what they do best - serving their clients.
Modern Wealth's hubs in Kansas City and Phoenix have played a pivotal role in their success, helping them reach over $13 billion in assets under management since their 2023 launch.
Acquiring Advisors and the Role of Organic Growth
Both Modern Wealth and Merit are acquisitive firms, and they've found that their organic growth setups are a significant draw for new advisors. Mayhue explained that Merit's focus on institutionalizing organic growth has resulted in a more efficient process, taking the pressure off advisors to constantly search for new prospects.
Targeted Marketing for Niche Growth
James Bogart, CEO of Bogart Wealth, took a different approach, focusing on targeted marketing to specific niches. Starting with a strong base of ExxonMobil employees, Bogart Wealth has grown to $4 billion in assets through intentional, niche-based marketing campaigns.
The Future of Inorganic Growth
While organic growth strategies are gaining traction, inorganic growth through M&A and consolidation is still a significant factor in the industry. According to Cerulli Associates, the retirement of over 26,000 advisors in the next decade will drive M&A activity. Many RIAs are evaluating exit strategies, creating opportunities for acquisitive firms like Merit and Modern Wealth.
The Impact of LPL Financial's Acquisition
The recent acquisition of Commonwealth Financial Network by LPL Financial has had an unexpected impact on the M&A landscape. Mayhue noted that this move has accelerated Merit's M&A plans, bringing in young, entrepreneurial-minded advisors.
A Shift in Perspective
What makes these strategies particularly fascinating is the shift in perspective they represent. Instead of relying on advisors to generate new business, these firms are investing in dedicated teams and processes to drive growth. This approach not only benefits the advisors but also creates a more efficient and sustainable business model.
In my opinion, this trend towards centralizing functions and focusing on organic growth is a sign of a maturing industry. As more RIAs reach a certain level of maturity, the focus shifts from acquisition to retention and efficient growth strategies.
The insights shared by these RIA leaders provide a glimpse into the future of wealth management, where organic growth is prioritized and supported by dedicated teams and targeted marketing efforts. It's an exciting time for the industry, and I believe we'll see more innovative strategies emerge as advisors continue to adapt and evolve.
