As the co-founder of multi-billion dollar RIA Beacon Pointe in Newport Beach, CA, Matt Cooper has a unique, in the trenches view of trends that are sweeping the financial advisory industry, on both the client and advisor side.

In addition to his original, $7-billion-plus RIA, Matt founded a sister company, Beacon Pointe Wealth Advisors, which partners with smaller RIAs around the country so they can enjoy the benefits of working with a larger firm. Beacon Pointe Wealth Advisors includes eight other RIAs, representing more than $2 billion in assets under management.

On today’s show, Matt addresses a variety of issues including technology, demographics, minimum account sizes, competitive threats, and much more. Learn from one of the best about how you can keep pace with the trends buffeting our industry.

Key Points From Matt Cooper

1. Lifestyle versus legacy. 

Due to technological innovations, an educated consumer base, and regulatory issues, the RIA market is more competitive than ever. Advisors need to be very clear about whether they’re aiming to create a lifestyle business, or a legacy business, and focus on the best approach to growing that specific type of business. A lifestyle practice with a solo advisor who is focused on building strong relationships with its clients can succeed, but you might end up working harder for less money down the road. Additionally, a larger, legacy-based business might be able to provide the same services at a lower fee. Knowing who your clients are and how to provide the best possible services for their specific situations is going to become more and more important, especially for financial advisors working on a smaller scale.

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2. Better scaling and specializing through technology.

At the other end of the spectrum, more and more legacy firms are dropping their required minimums, some to as low as $5,000. Robo Advisors, Skype, and other technology allows these larger RIAs to offer services to clients who are investing on a smaller scale. These are positive trends for consumers, who have more choices and access to top flight financial services. But it could also be a boon for smaller RIAs who run specialty practices, and attract clients who appreciate a bit more face time with their financial planning.

3. Serve the Boomers; prepare for the Millennials

Advisors are used to working with seniors who came of age in the ’60s, became, in general, more conservative as their assets grew, and who were content to meet with a financial advisor once or twice a year to check in on their plans. The next generation of investors is going to be much more hands-on. Millennials have grown up with instant connection via technology, and they’re going to expect that same kind of instantaneous information and collaboration when it’s time to make plans for their money. If you’re not already, advisors will have to become more comfortable with video conferencing, online planning platforms, and analysis models that will give millennial investors the information they expect for the fees they’re paying. While some investors will always appreciate the human touch that a good advisor can provide, technology is only going to get more and more sophisticated, and so are the investors growing up with those trends.

4. The RIA seller’s market.

Looking out at trends in the mergers and acquisitions market for RIAs, Matt notes, “the number of buyers to sellers, it’s hands-down more buyers.” As in any other market, that’s a recipe for inflated prices and over-paying. Matt cautions buyers to be wary of free cash flow values, which usually depend on the top line that clients pay and that don’t always get replenished when clients age, start withdrawing from their investments, or pass away. The sophisticated buyer will wait out high prices rather than get stuck investing in a firm at which the average ages of both clients and advisors only go up.

As for sellers, Matt sees control as the big issue determining whether or not smaller firms team up with bigger firms. Sellers need to take emotion out of the equation, and ask themselves if giving up services to a bigger firm in the short term is going to provide control over better growth and better services for clients in the long term.

5. Clients, clients, and more clients.

Whether you’re managing a billion-dollar RIA or a successful lifestyle firm, you live and die by the amount of effort you put into acquiring new clients. Slowdowns can happen across the industry, sometimes for inexplicable reasons. Working your social circles, hosting events, modeling custodian referral programs, and utilizing robust digital marketing can all help maintain a steady client flow. In some cases, a need for new clients might also be the tipping point that pushes a smaller firm to accept an acquisition — an example of accepting short-term loss of control for long-term gain.


Beacon Pointe visit Matt Cooper and his team on the web

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It book by Michael Gerber

Better Conversation, Better Outcomes podcast by BMO Global Asset Management

Values Clarification Toolkit Click here to download this FREE tool and start living your values.

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