Not that long ago, the typical independent financial advisory firm looked like a newly hatched guppy compared with leviathan wealth management franchises at companies like Morgan Stanley, Merrill Lynch, UBS, and Wells Fargo.
The increasing depth and breadth of independent advisory firms is enabling clients to have great swaths of their financial lives overseen by one team. “They realize that the decisions they make with their investments are interrelated to every other part of their broader financial picture,” says Sarah Moore, president of Donaldson Capital Management. an advisory firm in Evansville, Ind., with $2.3 billion in assets under management.
An evolving industry. The RIA industry is still developing, and it remains to be seen how the typical sizes of the businesses will change. In the meantime, we’re helping readers navigate the landscape of ranked firms by grouping them according to median account size.
There’s a seemingly endless supply of independent-RIA acquisition targets, thanks to a steady stream of new-business launches. And those launches are made possible by an ecosystem of third-party service providers that has grown up alongside independent firms over the past quarter-century. “You can get excellent off-the-shelf services from vendors with virtually no capital required,” says Miller of Captrust. “With the proliferation of excellent services that are available to our industry, we don’t really have any competitive disadvantage than more well-heeled financial organizations.”
— J. Fielding Miller, CEO of Captrust The virtues of independence. Independent RIAs also argue that they are free of many of the conflicts of interest that they say can occur at big brokerages. And they argue that as private businesses—publicly traded RIAs remain rare—they have an advantage over the Wall Street firms that must continually answer to investors. “We don’t have shareholders who expect a dividend from us and are looking for their stock price to grow every year,” says Moore.