Managing the Growing Complexities of Practice Management
When I ask RIAs across the country about the biggest challenge they face in leading and managing their practices, more often than not the answer comes down to one word: Complexity.

It certainly comes as no surprise. The fact is that a transformational shift in the RIA business, from simple and narrow to complex and comprehensive, has already occurred. The complexity and degree of difficulty have grown exponentially for RIAs. In the past, RIAs’ primary role was as a provider of investment advice and/or financial planning, the simple and narrow.

Today, many RIAs not only provide financial planning and investment-management expertise and services, they also function, to varying degrees, as tax strategist and preparer, estate planner, insurance specialist, and family meeting planner and facilitator. As older clients retire or seek to pass their assets to rising generation family members, RIAs must now also figure out how to best work with the next generation, who are potential clients and may hold the key to the future viability of an RIA’s practice. In other words, the complex and comprehensive.

Based on what I’ve been hearing, the challenges of complexity seem to be encapsulated in three main categories:

  • Capacity,
  • Personnel, and
  • Fees.

Many firms struggle with these issues, but managing them successfully can free up RIAs to focus on what they do best: Work with clients to manage their wealth and achieve their goals.


Capacity is about meeting and managing all the requirements placed on RIAs and their businesses. My colleague, OppenheimerFunds Senior Business Consultant Paul Brunswick, describes an RIA firm’s operations as being divided between the front of the curtain – all the client-centric and -focused work – and the back of the curtain, which is everything else. I think it is especially applicable in any discussion about capacity.

RIAs are entrepreneurs who happen to be in the financial guidance business. Yet many will consistently admit in confidence that they spend too much time behind the curtain managing capacity issues and not necessarily putting their client interactions and what goes into differentiating their firm from the competition at the forefront.

Dealing with the regulatory burden is just one example of where RIAs spend time behind the curtain. RIAs have a fiduciary responsibility to their clients and, because the vast majority take that responsibility quite seriously, many RIAs devote enormous amounts of time and resources to overseeing the compliance aspect of their business.

Technology issues are a double-edged sword. There’s no doubt they can be a drain on capacity, but the need for robust information technology capabilities is a given in this highly competitive environment. That said, the right technology and automated processes can help address and ease capacity pain points by enabling firms to work more efficiently and productively, better manage people, help streamline regulatory and compliance processes, and get leadership back out in front of the curtain where they should be.


People management is another behind-the-curtain issue on which RIAs say they spend a lot of time. Recruiting, managing, and retaining people presents its own challenges. It means getting the right people into the right jobs, making sure everyone is working in lockstep toward achieving the firm’s goals, and that they’re clear on their roles and responsibilities.

I often hear from RIAs something along the lines of, “I’ve got a staff of 15, and I’m not entirely sure what each one’s day-to-day responsibilities are.” It can lead to dysfunction and inefficiencies.

OppenheimerFunds offers a comprehensive series of tools, diagnostics, and templates through our CEO Advisor Institute Professional Development Program, including how to construct and manage a synergistic team and a diagnostic toolkit that can help RIAs address some of these personnel issues. These resources enable RIAs to quantify what goes on behind the curtain and allow them, in consultative fashion, to unpack those things: Who’s doing them? How often? Are they revenue generating? How necessary are they?

By using these tools, RIAs can stack-rank and squeeze out inefficiencies. Firm leaders can then see where the inefficiencies are, better allocate their time to more profitable aspects of their business, and get all members of the firm on the same page as leadership.


One of the most talked-about topics in the financial services industry is fees and, specifically, fee compression. To be clear, I am NOT hearing that many RIAs are feeling pressure to outright lower their fees. However, many firms I work with are consistently having to offer additional services and perform additional tasks to earn the same fee. Many are struggling with whether they are adequately compensated for their services, and if the manner in which they are compensated is commensurate with the work they are doing for clients.

The overwhelming majority of firms continue to derive a fee based on a percentage of the assets they manage for their client. Yet, in a competitive environment, firms are trying to differentiate themselves, and that differentiation is no longer tied to just investment selection. Increasingly, RIAs are turning to the holistic planning process as an area of differentiation.

For example, say an RIA prepares a financial plan for a client that serves as the framework for making investment allocations. In essence, they do the plan for free as part of this asset-based fee. Forward thinking RIAs are now talking about decoupling that process and considering alternative fee structures, such as a-la-carte pricing for specific services, a set fee for certain bundled services or an overall enterprise fee that encompasses everything an RIA can provide clients.

Based on this new way of thinking about fees, if a client comes to an RIA and needs help with investment allocation, but also needs to put a plan in place to get to that investment allocation, perhaps the RIA will charge a one-time fee for the plan only, and then let the client go execute it on his or her own. On the other hand, if a client needs a broad spectrum of services such as financial planning, investment allocation and management, tax strategy, and insurance, an RIA might charge an annual fee that covers all of that, in addition to the fees they earn based on assets under management.

To be sure, it’s not a question of whether RIAs are overpaid or underpaid; it’s more a question of whether they are being paid commensurate with the services they provide. In some cases, clients care primarily about investment performance and do not recognize any other services their RIA might be providing. It all adds up to why forward-thinking firms are trying to get out ahead of the complexities of the debate over fees and have conversations with clients about all the value RIAs can deliver.

For a more in-depth conversation about complexity and how RIA firms may address it, I invite you to watch our webcast, “Picking the Lock of Complexity Impacting RIAs Today.”