As the financial services sector finds itself in the midst of another paradigm shift within the industry, it's no secret that the RIA space is entering a transformative era to keep up with market demands. As the firms of the future prepare to adapt to an ever-changing environment, traditional recruitment tools are no longer the most likely option for them to succeed – alternative approaches are needed. With RIA firms of all sizes competing to recruit top talent, it has become increasingly imperative that the hybrid RIA firm of the future differentiates itself from the competition by offering attractive packages to prospective partners in an effort to maintain a standard of high perfection.

Since advisors currently have the upper hand in the RIA space, firms must reconfigure their onboarding packages to reflect the competitive nature of the industry. With that, optionality is an essential component needed to attract dedicated advisors to a hybrid RIA firm. Optionality allows a firm to offer multiple paths to partnerships, as it provides flexibility and adaptability to meet the varying needs and preferences of advisors—and in return, promotes organic and inorganic growth for a firm. With this in mind, the most attractive option to entice an incoming advisor to join a firm is to provide the ability to join in multiple ways, such as a W2, 1099, or a representative advisory partner. investment.

In addition, increased incentives for prospective advisors with competitive package deals, including equity ownership, retirement cash-out programs for in-house advisory partners, and mentoring programs will further attract the attention of top advisors. good. Since proper channels are in high demand, RIAs must capitalize on their offerings to maintain a competitive edge.

In parallel, mergers and acquisitions enable a firm to delve further into succession planning, as it gives it the ability to absorb and integrate the practices of other existing firms—in return, helping to future-proof the business by acquiring expertise. specialized, talent and technology that complements existing skills. Most importantly, this onboarding helps with retention rates and promotes a stronger internal culture, as many experienced advisors are actively seeking new growth opportunities.

For firms seizing M&A opportunities, it also provides another much-needed outlet as a means of combating the impending wave of massive wealth transfers. This is because when advisors leave the business and retire, the next generation of partners simply cannot afford to buy their books of business. As such, small and medium-sized firms should understand that investing their resources in acquiring these practices serves a dual purpose—it eases the financial burden on new counsel while still providing retiring colleagues with a strategic stable output that maintains their value. books.

However, with private equity firms slowly creeping into the fray to acquire existing books, up-and-coming small and medium-sized firms must be able to offer new advisors the same opportunities to expand their practices. Additionally, it helps firms leverage multiples, as buying a business at six to eight times revenue can mortgage a firm's value at 20 to 22 times EBITDA.

To keep ahead of the curve, a firm's growth rate for the platform for the future is also determined by the development of technology as a means to simplify and improve day-to-day operations. Not only does up-to-date and advanced technology help both relevant and current advisors, it also enables other talent roles to be involved in supporting a firm's scale.

This change is best reflected by hiring roles such as chief technology officer or chief information officer, as the implementation of these roles helps support technical logistics. This is driven by the use of aggregation tools that help capture dynamic and static assets in one place, alongside virtual reporting tools that have built-in AI capabilities that will improve the client experience advisors can provide. Thus, allowing a firm to evolve beyond just a single custodian – giving it greater security and service capabilities.

For firms looking to get ahead of the game, the path to greater growth rates is through adapting current operations to reflect the desires of advisors within a competitive landscape. This is demonstrated by offering multiple pathways to partnership, competitive onboarding package deals, and implementing state-of-the-art technology and retirement programs. As this is just the beginning of a transformative era within the financial services sector, firms that adapt their operations by implementing these critical components to reflect the new standards will continue to thrive and strengthen as leaders within the industry.

Jeffrey C. Gonyo serves as Senior Division President, Southern Division and Chief Recruiter of Steward Partners

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