Are Lifestyle RIAs Endangering Client Retention? Insights from Our Expert Panel

Small, independent investment advisors can thrive, even in today’s competitive market. But they need to be aware of the challenges that come with running a one-person practice. Panelists at RIA Edge Los Angeles recently discussed how strategic partnerships can help, yet also warned solo practitioners about potential pitfalls.

They agreed that technology has improved the ability for small advisors to maintain their lifestyle practices. Brandon Kawal from Advisor Growth Strategies mentioned that while outsourcing for scale is a valid approach, competition is fierce. He highlighted that clients have rising expectations, which can pressure solo advisors.

Kawal pointed out that, eventually, advisors may want to sell their business. Without a solid growth strategy, they could find themselves in a tough spot later on. It’s important to have a plan in place as clients will want to know your future intentions.

Derek Bruton from Gladstone Group shared an example of a sole advisor who had a solid revenue setup but wasn’t focused on growth. While this might work for some, Bruton noted that clients might eventually seek alternatives, especially larger firms that offer more diverse services.

Eamon Verdone from Savant Wealth Management emphasized that, although technology enables a great lifestyle practice, changing circumstances can put that model at risk. He referenced studies showing that new clients tend to choose larger firms that are actively involved in marketing and growth.

The panelists also stressed that with increased buyer interest in the market, solo advisors do have options if they decide to pursue a strategic partnership. Kawal remarked that the wealth management industry has been evolving over the past few years, attracting significant attention from investors.

Bruton added that proper preparation for any partnership can lead to a favorable match for independent advisors. With the growing opportunities available, the key is not if a firm will find a buyer, but when.

In summary, while solo investment advisors can create successful practices, staying adaptable and proactive is crucial. The industry is changing, and being prepared for growth and client expectations will help ensure long-term success. For more in-depth insights into the financial advisory landscape, you can check resources like the Investment Adviser Association.

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