While the RIA market is a growing opportunity, firms continue to struggle to gain access to best practices and to differentiate themselves, regardless of whether or not a deliberate distribution strategy is employed, according to a new study.
Noting that the RIA market is unique compared to traditional broker-dealer channels, that there is no comparable access point, and that practices vary from firm to firm, GDC Research’s “RIA Wholesaling Best Practices: A Qualitative Approach to Effective Distribution” report recommends that a distinct and differentiated effort is needed in order to break through in the RIA marketplace.
The RIA market manages an estimated $2.5 trillion in assets and includes between 13,000 and 16,000 RIAs, depending on how the market is segmented, according to GDC. With more firms targeting RIAs, asset managers and product providers will need to refine and develop a more effective RIA distribution strategy to identify the opportunities on what RIAs to target, and where and how best to obtain access, build rapport and add value, GDC says. The study, which is available for purchase for $4,800, examines the various methods and success factors used by asset managers and product providers in delivering RIA wholesaling and distribution support.
The report notes that level of wholesaling and sales activity has been increasing over the past two years, with half of the RIAs surveyed seeing either a significant (15%) or moderate (36%) increase. In addition, new RIA registrations with the Securities and Exchange Commission grew 44% in 2015 and is likely to continue growing in a post-DOL fiduciary rule world, according to the report. Moreover, Cerulli Associates estimates that RIAs will increase their asset share in the retail advisor market to 28% by 2018, up from 23% in 2015.
The findings contained in the report are based on 35 in-depth interviews with wholesalers and key executives from a wide range of large asset managers, mutual fund companies, product providers, RIA custodians and related industry vendors and experts. The research also includes an online survey and in-depth interviews with a variety of RIA practices to understand their perspectives on wholesaling and distribution support.
