Building a resilient practice for an unpredictable future

Four strategies to help manage your RIA firm through changing circumstances.

Key Points

  • Pivoting in the face of the pandemic helped RIA firms thrive—and many of those changes are here to stay. 

  • The ability to adjust and innovate while staying true to a long-term strategic plan is the key to resilience. 

  • Investments in technology and people, as well as flexible working arrangements, can help firms weather future challenges.

One of the key business lessons from the COVID-19 pandemic has been the importance of adaptability in a rapidly changing world. When circumstances make it difficult or impossible to operate the way you're used to, the only option is to innovate. 

Adaptability helped RIA firms achieve strong growth in 2020, with median AUM up 14.5%, revenue up 7.5%, and the number of clients up 4.7%, according to Schwab's 2021 RIA Benchmarking Study. Yet even as society and the economy continue to recover from the effects of the pandemic, RIA firms should anticipate—and prepare for—future challenges. 

Fortunately, many of the adjustments firms have already made are here to stay—and can continue to support resilience for whatever lies ahead. Consider these four key strategies that can help firms weather unexpected challenges. 

1. Lean on technology

Advisors have long recognized the role of technology to increase efficiency, but it's now clear how technology supports resilience too. From integrated systems to new communication tools, technology can help firms adapt to change and find new opportunities in a shifting landscape. 

For example, building an integrated technology suite around a client relationship management (CRM) system can help advisors access client data and other key software systems from any device, anywhere. It's no wonder that 96% of advisors cited CRM systems as one of the technologies that had the greatest impact on ROI in the 2021 RIA Benchmarking Study. 

Similarly, relying on virtual engagement technologies to facilitate client communication and marketing outreach helps ensure you don't fall behind on these key tasks when more traditional methods of connection aren't available. 

2. Allow for flexible working arrangements

Although in-person experiences are still the preferred way for advisors to meet with clients and collaborate with their peers, a resilient practice is one that enables this work to happen in multiple ways. That's why many advisors anticipate continuing to use a hybrid work model that combines in-person and virtual channels. For example, RIA firms expect to interact virtually with an average of 50% of clients and 30% of prospects going forward—even after COVID-related restrictions are lifted. 

Virtual interactions offer the benefit of more efficient use of time with few downsides—many firms report success in converting leads and maintaining client relationships despite having to rely on virtual channels. Adapting existing workflows to incorporate a mix of in-person and virtual meetings can be challenging—it often requires some additional technology investments. But that flexibility also allows for quick pivoting as circumstances change.

3. Stay grounded with a strategic plan

One of the biggest challenges when navigating change is making sure short-term adjustments don't compromise your firm's long-term goals or core values. Having a written strategic plan that outlines a vision for your firm's future and the steps you need to get there can help keep you on track. It provides a starting point to consider the potential opportunities and risks of any course corrections you might make. 

Strategic plans are already in place at 73% of top-performing firms in our 2021 RIA Benchmarking Study. But beyond a strategic plan, firms should consider documenting other important processes and goals—including a written succession plan, a referral plan, and a marketing plan. Each of these documents can help teams maintain their focus on key tasks and goals, even as they have to adjust the ways they're pursuing those goals. 

4. Invest in your people

A resilient firm is one with a stable workforce and a low attrition rate. The advisors and other staff on your team are the ones who actually manage all the adjustments and shifts required during difficult times, so it's critical that they feel valued, supported, and engaged. 

Offering a competitive compensation package that includes both base salary and performance-based incentive pay or compensation tied to firm revenue can keep your staff aligned with the firm's goals. Beyond compensation, though, some of best investments you can make in your staff include paying for continuing education, training, and professional certification and dues. Providing in-house career development and mentorship programs can also build stronger workplace relationships. 

With competition for top talent growing among RIA firms, maintaining these long-term investments even during challenging times can keep your staff in place—and committed to making the adjustments and adaptations required for a resilient firm. 

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