RIAs Need to Remain Competitive in the Face of Record M&As

For those looking to be acquired, growth is key, says a BNY Mellon Pershing executive.

Registered investment advisory (RIA) firms are in the midst of record-breaking mergers and acquisitions (M&As), with 69 transactions taking place in the fourth quarter of last year, according to Echelon—serving as the most active quarter in the history of the wealth management industry.

This makes it imperative for RIAs to remain competitive, which they can achieve by focusing on their core strengths in order to grow, Ben Harrison, head of advisor solutions at BNY Mellon | Pershing, tells PLANADVISER.

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“What we are seeing is that this industry is fragmented and ripe for consolidation,” Harrison says. “This will result in the emergence of dominant local and national providers. While there is room for many RIAs to provide differentiation and to remain independent, there are those RIAs that will want to become part of a larger organization in order to attract new business through brand recognition.”

In order to stand out in the crowd and attract buyers, RIAs need to focus on growth, Harrison says. “This is not easily achieved, as we are in a very competitive environment that is getting tougher every day. In the past decade, most of advisory firms’ growth has been due to market growth and referrals. Today, RIAs and wealth management firms need to be purposeful about adding new clients. They need to have additional human capital to support those new clients. They also need to be very focused on their client profile, marketing strategy and their pricing—all of which can be key differentiators,” Harrison says.

RIAs and wealth management firms can also grow through the use of social media and digital and paid advertising, he adds.