By Aly Kassim-Lakha, CEO of Aspen Standard Wealth
RIA leaders are understandably very protective of their firms. They’ve poured their blood, sweat and tears into building organizations that reflect their values and approach to client service, often over several decades. These organizations are the product of a lifetime of work, and form a legacy that will, hopefully, last for generations.
However, this legacy comes at risk the moment RIA leaders seek to transition ownership of their firms. In today’s market, owners can either sell to aggregators with short-term investment horizons (buying and selling every 3-5 years), or to integrators with a mandate to conform all acquisitions to a single identity.
That is why when the time inevitably comes to transition their firms to a new owner, most RIA leaders are determined to find a partner that respects their organizational culture and identity, while also supporting their long-term growth.
In a decentralized model, RIAs retain their brand, culture, leadership structure, investment mandate, and customer value proposition. Owners continue to make the vast majority of day-to-day decisions (ex. hiring, investment policy, etc.), just as they did prior to partnering. However, with the right partner, RIA owners receive the full benefit of “big company” resources, along with additional capital, playbooks and other infrastructure to free up time and inflect growth.
We are firm proponents of this model and believe it is in the best interest of owners, customers and employees alike. Specifically, through decentralization, RIA owners are able to:
- Uphold Customer Promises
RIA clients choose to work with firms because of their brand promises; the culture, investment mandate and service delivery model that make firms unique. Their relationships can span generations and should be cherished and protected. However, once RIA owners sell to aggregators or integrators, they lose control over the long-term delivery of these promises. This compromises the foundation of the firm-to-customer relationship and contravenes the initial commitments made to clients and their families. - Enhance Customer Service
In a decentralized model, RIAs retain the ability to tailor their services to the unique needs of their specific client segments (e.g. mass affluent, HNW, UHNW), demographics (e.g. tech executives, athletes, lawyers, etc.), and geographic markets. Many RIAs have honed the hyper-bespoke catering of their services over many years. By remaining independent, RIAs can continue to employ the model of service that has allowed them to be successful in serving their target demographic. - Increase Employee Engagement
A decentralized model inherently provides employees with a greater sense of autonomy and ownership. Employees remain leaders within their respective firms, instead of being smaller contributors in much larger organizations. They feel more engaged and motivated and can more easily see the direct impact of their work. In a people-based business, this enhancement in the employee experience is central to a well-run RIA and service model. - Make Faster Decisions
A decentralized approach allows for faster decision making. By remaining independent, RIAs can avoid the unnecessarily burdensome bureaucracy of a larger organization. RIA owners, advisors and employees are able to make decisions that they know are right for their clients, without needing central approval from a distant decision maker who is likely unaware of their situation. - Lower Costs
Finally, a decentralized model enables local teams to manage costs based off specific market conditions and nuances of the business, and not according to a rigid model developed in a manner unfamiliar with the dynamics at play within specific markets.For all of the reasons above, a decentralized approach is in the best interest of independent RIAs that want to continue to grow on their terms and preserve the legacy they have worked so hard to build.
Contact us to learn more about what to look for in a decentralized model for your firm.
