As a follow-on to my September blog about how RIAs might address the growing complexities of practice management, I thought it would be interesting and timely to share a sampling of some of the opinions, as expressed by RIAs from across the country, on these complexity-related topics.

The subject of growing complexity in practice management is clearly on advisors’ minds. It was the subject of many conversations I had with advisors at the recent Schwab IMPACT conference, and our September webcast titled “Picking the Lock of Complexity Impacting RIAs Today” attracted above-average viewership.

During both IMPACT and the webcast, we polled participants to get their feedback on three important issues confronting RIAs in the current environment. The first question was about factors inhibiting capacity at RIA practices; the second focused on RIAs’ views about merger and acquisition (M&A) activity; and the third on whether fees RIAs charge reflect the scope of services they provide clients.

Our online poll results, some of which I found surprising, are presented below:

Question 1: In today’s environment, there are several factors inhibiting capacity at RIA firms. Which challenge below is most relevant to your firm? (120 total responses)

  • 32.50% - Regulatory, compliance and other vital parts of business taking too much time
  • 21.70% - New business development/marketing focus is too much/too little
  • 20.00% - Technology not available or being used to fullest potential
  • 20.00% - Inefficient systems and processes in place
  • 5.80% - Firm Personnel not engaged or trained properly

Question 2: Which of the below choices most appropriately captures your views on firm or advisor M&A? (112 total responses)

  • 56.20% - Not likely to engage in M&A in the next three years
  • 33.00% - Likely to engage in M&A in the next three years
  • 10.70% - Highly likely to engage in M&A over next three years

Question 3: Do you believe your fees reflect the scope of services you provide? (83 total responses)

  • 71.10% - Yes
  • 28.90% - No

Interpreting the Responses on M&As, Fees

While I was not surprised by the responses to question 1, the responses to questions 2 and 3 somewhat contradicted the general sentiment we are hearing in our day-to-day RIA interactions. Perhaps the specific timeframe noted in question 2 impacted the responses to our inquiry on the likelihood of RIAs engaging in M&A activity. No matter what lens advisors are looking through on the topic of M&A, it remains one of the select few topics that continuously comes up in our conversations.

Regarding the topic of fees and whether they are commensurate with the scope of services RIAs provide, the devil may be in the details. A hard “yes/no” may be easier to answer, but when pressed a bit more on this topic, in our experience, many RIAs are exploring the “monetization” of additional services they have been providing to clients all along, and/or providing options for current and prospective clients to choose from, as it relates to their own specific relationship with their advisor.

With the new year rapidly approaching, we would also like to get a sense of what your top practice management goals are for 2019. I invite you to take our online poll, and I’ll share the results in a future blog.