Specialist
Former senior executive at Mercer Advisors Inc
Agenda
- Operating environment for RIAs (registered investment advisors) – impact of equity market volatility and a potential recession
- RIA aggregators’ competitive dynamics – Focus Financial (NASDAQ: FOCS), Hightower, Dynasty, Mariner and others, including entry of newer platforms and technology dynamics
- M&A market, highlighting where multiples are trending
- Outlook for H2 2022 and beyond, noting potential for fee pressures or regulatory risks
Questions
1.
What are your thoughts on the operating environment for RIAs [registered investment advisors], pulling out a couple of key trends or drivers that you think we should pay attention to?
2.
Arguably, fees haven’t really compressed over the last 5-10 years but RIAs are adding more services. Do you think we’ll see more fee compression for RIAs, as opposed to other areas of the ecosystem where we’ve already seen some fee compression?
3.
What’s the magnitude of fee compression from each of the groups? Is it X% over the next five years?
4.
How do you think about organic growth? Particularly in today’s environment, what are RIAs doing to drive organic growth and in what channels, outside of traditional or custodian referrals?
5.
What are you seeing on the client side, given the recent and continuing market volatility? Are clients panicking and withdrawing their money, switching or diversifying into multiple advisors or different platforms? Or are they generally calm, staying put and seeing through the volatility?
6.
What are you seeing for advisor recruitment and retention? Have you noticed any material changes to recruitment strategies, or even the willingness of advisors to switch?
7.
You mentioned advisors want to get paid for their clients. How do you see the compensation model for advisors changing?
8.
What are your thoughts on the different RIA aggregator firms – such as Focus Financial, Hightower and Dynasty? What is the relative positioning of each?
9.
To what extent do you view robo-advisors or upstarts such as Titan or Capitalise as true competition to traditional RIAs for the next generation of customers or investors?
10.
Do you think RIAs can ultimately be successful in engaging younger people that are now starting to accumulate assets? How can they serve them or what should they be doing differently?
11.
How do you see the competition shaping up, whether on the advisor recruitment side or acquiring new customers?
12.
What impact on the market dynamics have you seen from consolidation?
13.
What are your thoughts on the multiples being paid for M&A today? How has that changed since late 2021? Do you think those multiples will be sustainable?
14.
How would you gauge PE appetite in this space? It sounds like you would expect a few more PE firms to enter. What’s the consolidation runway for PE sponsors entering and rolling up assets?
15.
There are a few models for integrating assets post-M&A, some more aggressive than others. How do you think about the typical ones, whether it’s organic growth, advisor retention, synergies, cost-savings and so on?
16.
I think a lot of the deals lately have been acquiring more mom-and-pop RIAs. Do you see the potential for any larger deals or platforms tying up, or is there anything else on the higher end of the market?
17.
What are your thoughts on consolidation we’ve seen elsewhere, whether that’s Schwab’s 2020 acquisition of Ameritrade or Morgan Stanley’s 2020 acquisition of E*Trade? What’s been the reaction to that consolidation?
18.
How do you view the custodian referral channels? Do you see those programmes changing at all, or do many of the RIA firms that have been growing a lot generate a lot of growth from them? What’s the quality of leads from that channel?
19.
We’ve also seen a fair amount of consolidation on the TAMP or wealth management tech side. How do you view the different platforms on that end?
20.
How have you seen technology impact RIAs and business models, maybe more specifically since the onset of coronavirus? I know that originally there was a lot of talk about the amount that could get done virtually and perhaps not needing as much of an office presence these days.
21.
What’s your observation of iCapital and Cais’s reception within the RIA community and among their clients? How do you see alternatives or structured newer platforms moving forward?
22.
You mentioned direct indexing and I think there’s a broader move toward more personalisation. Could you expand on what you’re seeing there? Do any direct-indexing platforms stand out that you think advisors like to use?
23.
In your experience, how did tougher markets impact net flow trends? Could contributions from existing RIA clients into their retirement accounts slow?
24.
In today’s environment there is rampant inflation in the US and a potential recession ahead. Could existing clients lessen the allocation towards the retirement or tax accounts?
25.
What do you view as the top three risks for the RIA business over the next 1-3-5 years?
26.
Is anything commonly misunderstood by the investment community when looking at this space? Do you hold more of a contrarian view anywhere?
27.
Is there anything on RIAs that we didn’t discuss that you want to highlight? Do you have some final remarks to tie it all together?
