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The shaping of this year’s list reveals plenty
about the shifting dynamics of the RIA industry.
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Annual lists serve a lot of functions. They offer a clear snapshot of an industry in transition. They also provide a valuable yardstick and often can verify long-term trends. Take the latest installment of Financial Planning’s RIA Leaders issue, which features our ranking of the
nation’s top RIA firms.
The firms that are moving up the list — as well as the firms that have moved
off the list — are at the foundation of our cover story.
To best highlight the shifting dynamics, we focused on
fee-only firms and excluded those with broker-dealer
affiliations or with large stakes held by banks or other
FP senior editor Ann Marsh, who wrote the cover
story, says she was struck during her reporting by the
way that independence was a decisive factor for advisors as they developed plans to grow their practices.
Marsh tells me that, back in the late 1990s, when
Rob Francais founded the RIA that would become Los
Angeles-based Aspiriant — which ranked No. 1 on our list of fastest-growing, fee-only firms and No. 3 on our overall list of fee-only firms — it could be difficult to
convince prospects that they needed the services of a comprehensive financial
planner. That is no longer the case.
“We were marketing into a headwind,” Francais says. “Today, we are market-
ing into a light breeze and the breeze is going not against us but with us,” he
says, adding that “the industry is hitting its stride.”
Yet at the same time, it remains to be seen how the majority will handle the
challenge of structuring their ownership. As our cover story, which begins on
p. 34, points out, growth in the RIA space is rapidly outpacing the rest of the
financial services industry. However, more new entrants are choosing a dually
registered business model.
By presenting a list of firms without broker-dealer affiliations, we’ve captured those independents whose world view has required them to adopt (and
heavily fund) complex succession plans. Many other RIAs simply won’t or can’t
devote the time and resources to doing the same.
The result is that the definition of independence among RIAs will remain a
subject of debate for years to come. And the giants that look likely to emerge in
this space, as consolidation continues, will evolve into very different players, due
to the decisions about ownership they are making — or failing to make — now.