Here at Gregory FCA, we have the privilege of working with firms who are looking to catalyze growth for the future and are using the current strength of their business to bolster their marketing and communications plans to ensure that their businesses are in shape to withstand the challenges of the most competitive market RIA firms may have ever faced.

It is also apparent to us that not every RIA firm is taking the opportunities and the threats of our current environment as seriously as our clients do.

RIA firms charting plans for their next five years in business better be careful when projecting growth estimates. Continued industry evolution and market forces are increasing the odds that many RIA firms will be challenged to sustain any growth momentum they’ve enjoyed over the last five years.   Rapid change in technology, the change in customer behavior, the surge in competitive forces and the plateauing of the AUM-fee model are just some of the reasons to be concerned for the growth of RIA firms.

Make no mistake, I am nothing but bullish on the concept of independent advisory businesses charging a fee for quality investment advice. Savvy consumers will pay for that service, provided the service delivery model, pricing structure, technology interfaces and investment approach meet the new standards.  Judging by the increasing volume of deals in the sector, including the surprising and bold move by Highline Wealth to sell to industy upstart Bronfman E.L. Rothschild (announced this week), I am not the only one with a bullish outlook on firms that are staying ahead of the evolutionary curve.

For every United Capital that consistently challenges itself to upgrade its financial planning process and client experience model, there are countless other firms that cling to the status quo falling back on the “if it ain’t broke, don’t fix it” logic that lulls firms in all industries into complacency.

For RIA firms who don’t want to see their firms suffer, there are lessons to be learned:

1) Robo-advisory firms aren’t changing the demand for advice — they are changing the delivery format of advice.  

It’s not a question of whether or not consumers will really want to deal with their financial advisor via the web – most consumers are already using mobile and web solutions to monitor their bank accounts, pay bills, read up on savings options and more. When it comes down to life’s difficult decisions – can I pay for my children’s education? When can I retire? How do we divide our assets after divorce? – a quality advisor’s role is irreplaceable.The solution; make sure your firm’s digital client interaction tools are best of breed and are compatible with mobile, but don’t forget to pick up the phone and cement the value of the human aspect of the relationship.

2) Marketing has become a more fragmented exercise than ever before.

Do you have a good e-mail marketing strategy? Do you leverage LinkedIn, Twitter, Facebook and YouTube? Have you executed on any good events to appeal to current and future clients? What attention have you given your website? Do you have a search engine strategy? Is your company news and expertise being covered and included in the news coverage of issues that impact your clients?   If you are getting tired of reading my litany of questions, then you get the point that there are so many places to tell your story and support your position and value in the marketplace.

3) When business seems to be growing “all by itself,” it is precisely the time to invest in new growth initiatives.

If you run or work for an advisory firm that earns fees based on assets under management, there is a good bet that your firm has seen revenue increase over the last five years as the performance of the markets has outstripped the yearly 3 to 6 percent distributions your clients are taking.  The growth of your business that is attributed to investment performance rather than new client acquisition can help fund investments in new marketing activities. Why wait until your business is suffering to modernize your marketing and communication approach?

The rise of tech-enabled advisors, the race for quality human capital, the attack on the “1 percent on assets” fee model and the inevitable decline of the equity markets are just some of the current threats to the conventional RIA business.  If you’re not changing how you market, how you engage your clients and how much you invest back in your business, the challenges may be too much to overcome and the next five years could bring a swift fall for some stuck-in-their-ways RIA firms.