Should RIAs Care About Broker Protocol?

As noted last week, much has been written about some of the major wirehouse firms abandoning protocol these last few months.  This week we explore what the implications are for RIAs and how it could impact their value in the marketplace.

What We’re Reading About Broker Protocol

Most of the sector’s recent press has focused on broker protocol, so we’ve highlighted some of the more salient pieces as a preface to our take on the matter in next week’s post.

3Q17 Call Reports

As we do every quarter, we take a look at some of the earnings commentary of pacesetters in asset management to gain further insight into the challenges and opportunities developing in the industry.

Alt Managers Bounce Back After Years of Underperformance

We think performance fees will likely continue to fall (in one form or another), but, like active management, never be totally eliminated.  So on balance, a modestly improving outlook for the sector is probably justified after a rough 2015 and 2016 for most industry participants.

Laissez Le Bon Temps Rouler! RIA Market Caps Peak Despite Headwinds

If you only followed the press surrounding asset managers, you’d think the entire industry was in serious trouble.  Fee compression, fund outflows, regulatory overhang, rising costs, and a host of other issues have dominated headlines in recent years, yet the market doesn’t seem to care.

Recent Trends in Asset Management

This week, we’re sharing some recent media on trends in asset management, including the breakaway broker phenomenon, M&A activity, and the ongoing shift towards passive products.

Additional Considerations for Leaving a Wirehouse or Brokerage Firm

Piggybacking off of our post from last week, we discuss the various options one faces when leaving a wirehouse firm, including the various pros and cons to doing so.  The advisory profession has evolved significantly over time, so we’re writing this post to keep you apprised of your options as you consider the big leap.

Options for Today’s Financial Advisors: Should I Stay or Should I Go?

Ever since the Financial Crisis, wirehouse advisors have been pondering this question as the independent model continues to lure wealth managers from the big banks and brokerage firms.  This post discusses the various options that financial advisors (FAs) are faced with today and when it makes sense for them to stick around or do their own thing.

What Is My RIA Worth?

Of all the topics we cover in RIA Valuation Insights, the most popular concerns what an investment management firm is actually worth.  As a consequence, we thought it would be worthwhile to offer a webinar on the topic, and are planning to do so on Tuesday, October 3. 

Recent Trends in Asset Management

This week we’re sharing some recent media on trends in asset management and the outlook for M&A activity.  Most industry observers foresee an uptick in asset manager deal-making as rising costs, asset outflows, and a heightened interest from consolidators incent many firms to pull the trigger on a sale or business combination with another RIA. 

What’s Got Our Eye: Current RIA Trends

This week, we’re sharing some recent media on trends in the RIA space. We’ve blogged about asset flows, bank interest in the RIA space, the plight of active management, and the fiduciary rule, but these articles represent a deeper dive into each of these topics.

What’s Got Our Attention?

This week, we take a break in our musings on asset manager valuations and impractical sports cars to share some recent media on trends in the RIA space we’ve been following.

Can Planning for Succession Give Your Investment Management Firm an Unfair Advantage?

One refrain we often hear from clients is how different they are from other investment management firms. We agree. Asset managers have a lot in common, but we see a huge variety of personalities, investment approaches, business plans, marketing activities, compensation models, etc. In short, every firm has a unique culture, just like families.

IPO Supply and Demand

The stock market rallied in the first five months of the year, with the Dow Jones and S&P 500 reaching record highs and continuing to climb. Nevertheless, IPOs remain scarce compared to prior years.

Do Your Clients Give You an Unfair Advantage?

A question that we don’t hear enough RIAs asking themselves: what makes our best customer? The conventional wisdom we’ve gathered from talking with a wide variety of investment management firms over the years is that high net worth relationships make the best clients for RIAs. Relationships with individuals are supposed to be stickier than, say, institutional relationships where investment committees drop managers the moment their three-year performance lags the index. However, is it that simple?

Focus Financial’s Quest for an Unfair Advantage: A Long Journey to an Uncertain Destination

As part of the analyst community that closely follows developments in the investment management industry, we were disappointed (but not surprised) that Focus Financial Partners pulled their S-1, again, and found a private equity recap partner instead of going public. Picking up on last week’s blog theme, Focus likes to tout their strategy of building an international network of efficiently connected wealth management firms as an “unfair advantage”, but it appears that their real capability is finding capital when necessary to avoid a public offering. Stone Point Capital and KKR bought 70% of the company, enabling prior private equity partners, affiliates who had sold their firms to Focus in exchange for stock, and employees with equity compensation to monetize their positions while Focus remains private.

Building Value in Your Investment Management Firm: The Unfair Advantage

After years of working with investment management firms of all shapes and sizes, it is our opinion that building the most value in an RIA comes down to the same thing: developing and capitalizing on some unfair advantage. That may sound unnecessarily mysterious or metaphorical, but it really boils down to examining the basic building blocks of firm architecture and finding out where your firm can excel like none other.

Q1 Shows Glimmer of Hope for Active Managers and Continued Gains for Trust Banks

The First Quarter 2017 Asset Management newsletter has been released. This quarter’s newsletter focuses on the mutual fund sector, which has been plagued by asset outflows into ETFs and other passive strategies for most of the last decade. The first two months of this year do, however, offer a ray of hope as 45% of U.S. based active managers beat their relevant benchmark, resulting in February being the first month of inflows into active products since April 2015.

Active Management Down But Not Out

Fresh off a 111-82 KO from the San Antonio Spurs on Saturday, our hometown Memphis Grizzlies are certainly battered but not totally eliminated from this year’s NBA title race. As this post goes to press, we still don’t know the outcome of Game 2, but it will undoubtedly be an uphill climb for the Grizz as it usually is against their divisional foes in Central Texas. Still, the Spurs/Grizz rivalry over the last ten years has not been nearly as one-sided as the battle for fund flows between active and passive investors in the ETF era.

Will the Fiduciary Rule Ever Become Law? | RIA Central Investment Forum Follow-up

Last week, Matt Crow and I presented at RIA Institute’s 3rd Annual RIA Central Investment Forum, and this question was asked to the crowd of 70+ industry participants in attendance. Only about half the audience raised a hand. This comes after another delay last week, further extending the rule, now set to go into effect June 9th. Even most of those at the conference who thought it would eventually become law thought this deadline was too ambitious. So why the delay?

Excuse Me, Flo? Inflows and Outflows Drive Disparity in Performance between Different Classes of Asset Managers

Immediately before ordering the Soup Du Jour and duping Sea Bass into picking up his lunch tab, Jim Carrey’s character in Dumb and Dumber, Lloyd Christmas, rudely accosts his waitress at the Truk-Stop Diner with this inexplicable reference to the early 1980s sitcom starring Polly Holliday as Florence Jean “Flo” Castleberry. Decades after the movie’s release in 1994, the market seems to be postulating the same question in pricing RIAs.

RIA Performance Metrics: Keep an Eye on Your Dashboard

A persistent truth about investment management is that no analyst ever saw a piece of information he or she didn’t want. Professional investors are, by their very nature, research hounds – digging deep into a prospective investment’s operating model, financials, competitive landscape, management biographies, and whatever else might be relevant to try to evaluate the relative merit of buying into one idea instead of another. This same diligence doesn’t always extend to practice management, though, and we are not infrequently surprised at how little attention management teams at RIAs devote to studying their own companies.