How to answer when clients ask, “What’s in it for us?”

By Wendy Leung

Translating the tangible benefits of a move to the RIA space to your clients

As the wealth management landscape evolves, we continue to watch a steady stream of top advisors leave the traditional wirehouse space for independent RIA models. Although independence invariably gives these advisors greater freedom, flexibility and control, we also need to ask the question, “What’s in it for their clients?”

At the heart of the matter is the fact that in the RIA space there is the separation of advice from asset custody and product manufacturing—a benefit to clients since it eliminates conflicts of interest and allows the advisor to act as a true fiduciary.

Consider these 5 other key advantages that translate into an enhanced client experience:

1. No platform restrictions: Advisors are not limited to a preset platform provided by their firm. They can shop “The Street” for best in class product and pricing in all categories, which translates into more options and better pricing for clients.
2. Technology: State of the art integrated technology in the RIA space allows advisors to create far more sophisticated and customized client reporting including financial and non-financial assets as well as assets held away.
3. Pricing flexibility: Advisors have complete pricing discretion with no firm mandates.
4. Holistic advice: Advisors have greater freedom to advise clients beyond the scope of traditional financial investments such as selling a business or acquiring investment properties.
5. Enhanced service: Teams that service HNW and UHNW clients often are frustrated by compliance restrictions that come from a firm managing to the lowest common denominator.   Eliminating bureaucracy helps improve efficiency and results in a more customized and enhanced client service experience.

Take the example of Mitchell Brown, a 20-year wirehouse veteran, who heads up a $5 MM team that just recently moved to a boutique RIA. What prompted this move? Mitchell felt that being part of an enormous retail bank, which catered to mass-market consumers, no longer served his team or his high net worth and ultra-high net worth clients. The fact that this disconnect made it very difficult to provide clients with the comprehensive range of financial services and support that they required made it clear to Mitchell that he needed to leave. What Mitchell found was an independent boutique that truly aligned with his team’s client service model and client base, with a cutting edge platform and set of resources that would provide them the flexibility to better and more completely serve clients in the following areas:

1. Enhanced communication channels, including the ability to better utilize social media to interact with clients. In addition, the team can now create customized newsletters speaking directly to clients and conveying the team’s unique investment perspectives.
2. Customized high-end financial planning and reporting capabilities, designed to allow the team to act as true holistic wealth managers, capturing all elements of their clients’ financial lives.
3. Greatly reduced bureaucracy allowed the team more time to be client facing and to create an even more customized and high-end service and support model tailored to HNW/UHNW family needs.

Over the last few years, we have seen major momentum – particularly among top advisory teams – out of the wirehouses and into independent RIA models. We anticipate that this momentum will continue as an increasing number of entrepreneurial-minded folks recognize that their own “independence day” will also result in tangible benefits for their clients—a win-win for all.