Recently, BlackRock, in partnership with IN Research, released the findings of its third Elite RIA Study. BlackRock categorizes as “Elite RIAs” those with at least $250 million in AUM scoring in the top 50% in revenue per professional and staff.
Based on survey responses, BlackRock has identified five “levers of success” that enabled top RIAs to achieve and maintain their elite stature:
• Organizational structure and branding
• Client targeting and service delivery
• Investment management
• Organic and strategic growth
While the last three seem to be somewhat table stakes, the first two warrant further exploration. Both can help a closely held practice serving a relatively narrow clientele transition to Elite – an independent enterprise that is poised to significantly broaden its client base.
Organizational structure and branding
The study posits that a consistent client experience is achieved through 1) systematized workflows and processes that are increasingly automated and 2) back-office tasks that are continuously streamlined. Our experience with a wide array of RIAs confirms this – consistency and efficiency helps foster growth, while also helping to create an enduring brand that is not dependent on a “star” advisor.
A firm’s brand is more than simply traditional marketing and must be supported by consistent and replicable operational processes and procedures. This enables Elite RIAs to grow both organically and to attract and/or acquire other RIA firms and more readily fold them into their businesses.
Client targeting and service delivery
When asked about success drivers in the foreseeable future, 58% of Elites pointed to retention and growth of existing clients. Elite firms better understand the value of actively cultivating their existing client base, which not only reduces turnover, but can also boost referrals. That may be because Elites have more to gain (and lose) from their bigger books, but it’s just as likely that they became Elites by actively cultivating their existing client base.
Many Elite firms focus on a flexible team approach to client service, rather than an advisor centric relationship model. This helps to provide a broader service level and reduces the risk of losing a book of business if an advisor leaves by tying the client to the organization rather than an individual.