Evening Brief – 12.01.23
Asset Managers Turn to Tech to Attract RIAs
Asset managers seeking to distribute their products through registered investment advisors (RIAs) are turning to technology to provide better value, according to a recent report by research and consulting firm Cerulli Associates
Over the next three years, 71% of distribution executives regard the RIA market as one of their three best growth possibilities, while 54% and 47% see similar opportunities with the wirehouse and independent broker-dealer channels, respectively.
Retail-focused RIAs collectively managed $7.1 trillion in client assets as of the end of 2022, the report notes.
However, depending solely on product offerings is insufficient to attract advisors, particularly in the rapidly expanding RIA channel.
According to Cerulli, asset managers are also investing in technology to address company challenges, as well as in data infrastructure to improve their presentation of goods and value-added services to RIAs.
“Advisors face numerous challenges running their practice, and asset managers providing additional services, beyond product, that deliver value to a financial advisor’s business is key,” Cerulli said. “It is especially critical for developing relationships with RIAs, who lack the traditional home-office support enjoyed by those in the wirehouse channel.”
As a result, 57% of distribution executives believe expanding digital marketing capabilities is a high priority over the next three years, while 78% say developing predictive analytics is a top priority over the next three years. Meanwhile, 47% of executives say one of their top priorities is to improve existing wholesalers’ technical skills to compete with more advanced advisor teams.
Cerulli discovered that asset managers are also increasing the adoption of advisor portals and portfolio creation tools.
“Today’s distribution teams must be able to handle collection and interpretation of complex data sets — especially for internal sales positions,” Cerulli Associate Director Andrew Blake said. “Predictive analytics and data training for sales teams are critical components of successful distribution.”
Asset managers can also benefit from updating existing data infrastructure, which can help decrease regulatory risk, reduce costs, and increase efficiencies.