Summary: In this episode of The Data Possible Podcast, Mark Bruno, Managing Director of Wealth Management at Informa, talks about RIA Edge, a new platform for leaders of RIA firms to learn, connect, and ultimately identify new growth strategies and opportunities that will shape the future of their businesses. Through a mix of data, rankings, multimedia, and face-to-face events, RIA Edge is designed to highlight the strategies and successes of the industry’s leading firms. In this episode, you will learn:

• What successful RIAs are doing to drive growth
• Challenges advisors are seeing and what are they doing to combat them
• Why it’s important to create and focus more content towards the RIA community
• Why people should be reinvesting in the business
• How small and mid-sized firms can learn from the largest and fastest growing RIAs and accelerate their growth

Resources: Discovery Data | RIA Edge

The Data Possible Podcast is produced by our partner, Advisorpedia.

Podcast Transcription:

Doug: Hello, and welcome to The Data Possible Podcast presented by Discovery Data. This is your host, Doug Heikkinen. Today we're lucky enough to have Mark Bruno with us who's the Managing Director of Wealth Management at Informa. Welcome, Mark.

Mark: Doug, thank you so much for having me. I appreciate it.

Doug: You've been very busy. You've joined Informa and WealthManagement.com, and you recently released a platform called RIA Edge. Tell us a little bit about it and why it was created.

Mark: Yeah, I appreciate that and appreciate the opportunity to talk about RIA Edge. Actually, I think about a year and a half ago, when I was on this podcast, I was at Echelon Partners and was working with a lot of companies that were large RIAs, say a billion dollars in assets under management and up. And it gave me a really good opportunity to get some direct exposure to the challenges that they had. And they were all good challenges. They were growing at a really incredible, really rapid rate. But they were trying to figure out what types of roles do I need? What do I need to invest in from a technology and an operational standpoint, and it was really, all over the place, what their needs were and ultimately what you could do to sort of address or answer some of their questions. So when the opportunity at Informa came up, it was very attractive to come over and start to not only bring our events and our media businesses closer together, but some new businesses and some new platforms for the RIA-plus communities, what I would call it, to the billion dollar plus firms. RIA Edge, it is a dedicated website on WealthManagement.com. It has not only content for RIAs, but it has rankings that we worked with Discovery Data, thank you very much, to develop and also identify the firms that are growing the fastest. So we have a podcast, RIA Edge, we do some workshops around M&A and valuation, we just launched a newsletter for RIA Edge, and we will be hosting an event Wealth Management Edge with the RIA Edge executive track right after Memorial Day, May 31, in Florida. So very specific offering for C-Suite at the largest and fastest growing RIA firms and we are focused on one thing and one thing only which is helping you figure out how to continue your growth.

Doug: You got a lot done really quickly. So congratulations. So let's talk a little bit more about the rankings. What criteria are you ranking on? What trends have you seen from firms on the list? And how did Discovery Data play a part of that?

Mark: Yeah, I mean, Discovery Data was great. Fantastic team to just help us figure out, you know, when you have 37,000 RIAs, and you really want to identify the firms we consider to be sort of pure play RIAs in our space, you have to be really specific with how you're defining them, you know, so we looked at firms that had a very specific focus on Financial Planning, Wealth Management Services, we also looked at firms that had very high concentration of clients that were high-net-worth individuals. And that very quickly kind of gets your 37,000 down to let's call it 9-10,000, firms that you and I would recognize to be true or pure RIAs and not just investment advisors, who are just sort of registered, right, with the SEC. Within that we looked at the firms that were growing the fastest over the last three years, we looked at their assets under management, we looked at some of their clients, and ultimately identified firms that are growing the fastest at an industry level, right, based on AUM, and we've segmented out about eight different bands, we also looked at the fastest growing firms at a state level, because we want to make sure that we're not just thinking about size, right, but what role to geography might play and growth and where there is sort of a growing interest in need and wealth management and independent advice. And then the last piece, we also created a set of rankings, looking at the fastest growing women-owned firms, that's something that we are very interested in learning more about. Not only what are they doing to drive growth and success, but we do want to make sure that we're featuring and shining a light on those firms that you know, while they may be a small portion of the overall industry, they're doing some really excellent things and we want to make sure that we acknowledge that. So it was a labor of love, couldn't have done it without the Discovery Data team took several months. But we were really excited to get the rankings out right before the holidays in December. And so far, we've gotten some really great feedback from our community. And we're learning more and more every day. I've done podcast interviews with I'd say about a dozen of the firms that are on the rankings over the last couple of months. And it's just amazing. If you've met one RIA, you have met one RIA and every story is incredibly unique. And I learned something from every interview.

Doug: Now that said, if you've met one RIA, you've met one, what are some of these firms doing to drive the best growth rates in the industry?

Mark: Yeah, so I think there are probably two camps I would look at it in the organic growth versus inorganic growth. On the M&A side that is definitely driven for the firms that are at the top of the list; a lot of growth and raw assets. And it's not surprising, we just saw Echelon, my old firm, came out with their 2021 Deal Report the other day, and there were 300+ deals that took place last year, there were 200+ deals that took place the year before that. So over the last few years, we've seen nothing but incredible levels of M&A activity. So for the largest firms, the ones that are at the top of the top here, M&A has been one of the primary drivers. For the firms that are in sort of that sweet spot that 250 million to 750 million and are growing, they're growing through a mix of good marketing, mix of really smart business development. And I would say, you know, over the last couple of years, the industry essentially went virtual overnight, right once COVID hit back in March 2020. So a lot of firms had an opportunity to figure out how to do real digital marketing for the first time. Some figured it out, a lot didn’t. And just sort of this new way of identifying opportunity, engaging with clients digitally, right, and gaining trust in a digital environment has led some firms to sort of crack the code, and really figure out how to do digital marketing and how important it can be to just sort of the future growth of your firm. So it's a mix of things. But the ones that are doing it really well have done M&A really, really well. And often I should say, and the ones that are growing, you know, organically have really started to figure out how to do true digital marketing.

Doug: Just because some of these firms are growing and being very successful doesn't mean that there's challenges they’re not seeing. So looking at it, what are some of the challenges you’re seeing and what are they doing to combat those challenges?

Mark: Number one challenge, I would say it's just the human capital side of things. You know, we know that the industry has a talent shortage to some extent. And it's not just the classic sort of story about, you know, the succession planning crisis, actually I don’t even really know that there is this succession planning crisis that we've been talking about for years, but there is a short supply of new talent that's coming into the space. And I've heard a lot of companies that have done M&A over the last couple of years, and a lot of them say the same thing. It's easier to acquire talent than it is to hire talent right now. And when you think about a firm that was 500 million in assets just three years ago, and has a billion dollars today, they need more, they need more capacity, they need different skill sets, especially I mentioned, you know, the digital marketing piece, there's also just the client experience piece, not just acquiring clients, it's how do you interact with them, right, from a digital perspective. So I think the biggest challenge right now, in our space, even for the most successful firms is understanding what are the roles that you need to support the growth you've had, and continue to grow. And then two, identifying the right talent and the right individuals to help you get where you need to be.

Doug: Why is it important to create and focus more content on this community of the large and fast-growing RIAs?

Mark: That is a very good question. And I mentioned before, obviously, 37,000 RIAs but really the firms that have a billion in assets under management, they’re, give or take, you know, 1,000 to 1,500 of those depending on, you know, the week that we're in. And, you know, those firms are probably responsible for somewhere in the neighborhood of 80% of all RIA assets, right, maybe even 90% of the revenues and the profits that are in the space. And when we looked at actually, with the rankings, they're about 600, just under 700, firms that are, you know, in all of our rankings, across the three lanes, I mentioned before. Over the last three years, they grew, you know, by a combined 300 billion in assets under management. And you look at that audience and just the concentrated influence that they have, there's such a massive need for them to learn. And it's a community too, they love learning from each other. I don't find RIAs are hyper competitive with one another, there's a certain level of altruism there. So we see an opportunity to help connect them. And we also just see an opportunity to have really personal one to one conversations where, you know, this space as well as anybody, people are still doing study groups. They may run a $4 billion RIA but they're getting together, even in this sort of bizarre, COVID world that we're living in now. Just to kind of talk through “hey, how did you sort of figure out how to convert more of your tax planning clients into your broader wealth management clients”, for example. So we're still seeing all these organizational needs. We're still seeing all these growth needs. But we're also seeing this incredible need to connect these firms that are only getting larger and larger, and the influence is only becoming more and more concentrated.

Doug: A super study group I like it.

Mark: A super study group.

Doug: Yeah.

Mark: A meta study group.

Doug: Exactly. I'm not sure you want to use meta today. Has there been anything that surprised you throughout this process of creating the platform?

Mark: You know, I think probably a few things. The first one that comes to mind, though, is just how interested and how open people are to learning. These are firms that are so unbelievably successful, right, in many ways. But there seems to be this consistent commitment to learning and growing. They're not afraid to share, you know, when they've made mistakes, and not just with me on my podcast, but with each other. So it's this really interesting community of people who've been incredibly successful, who aren't necessarily competing head to head for, you know, clients, but are willing to contribute ideas, real experiences, right, and help each other in a way that I never really saw before. So I mean, we're lucky to be in a space like that, especially when you're in the information business, because you know, people want to be informed, people want to be connected. And especially over the last couple of years, when we haven't been able to get together, I think there's more of an appetite than I've ever seen, for people to get in the room, have a face to face conversation, not just the 30 minute time block on Teams or Zoom, and then you run to the next Teams or Zoom, right, but let's talk about all the things that we've learned over the last couple of years and all the things we'd like to accomplish over the next several years. And how we can sort of teach each other and obviously help each other get even better at what we do.

Doug: It's really important for people to reinvest in their business and this is a great way to do that. So how can smaller or midsize firms learn from this and accelerate their growth?

Mark: Yeah, I think the smaller firms, they're not going to be able to do the M&A, for example, that some of the $10 billion plus firms have done over the last several years. And it's interesting, because the largest of the large, they're not even really what I would consider to be sort of true RIAs, they're really more platforms at this stage. They become our emerging institutions in a lot of ways. So if I'm a smaller RIA, I would look at the personnel and the hiring decisions, I would look at the organizational design, right, that some of these firms now have in place to start thinking about, if I'm 250 million, and I want to get to a billion, what does that lifecycle look like? And if I only have five or six employees at my firm, and they're primarily, you know, advisors right now who are working with 70 to 100 clients each, what do I need to do right to get to the point where I'm able to take on another 200 clients at a firm level without completely locking or completely consuming all of my advisors’ time. And so they can't do other things like business development or sit and work with clients. So really, more than anything, I kind of think of if I'm a smaller RIA, what do I want to learn from the largest and fastest growing? How do you get there? And if you didn't do it just by rainmaking, and you did it through sort of strategic, organizational design, strategic hiring, and there was a certain process that you put in place, not just for acquiring clients. Growth isn't just about acquiring clients, right, It's obviously about retaining your existing clients, but continuously delivering an amazing experience to them, too. So, you know, how did you set your firm up for success from a personnel standpoint? And how do you continue to sort of evolve, right, so that you're constantly growing constantly getting better. And you have capacity to take on even more growth if that's what you're inclined to do.

Doug: Mark, this is great thinking, super work. Can everybody access this and interact with it at WealthManagement.com?

Mark: Yes, the website itself is WMRIAEdge.com. And anybody can access the rankings that we have on the website. So if I didn't give props to Discovery Data enough, I should just end by saying we wouldn't have been able to do this without the Discovery Data team. It wasn't just publishing a list on the site and moving on. We actually launched an entire website that's committed to highlighting this. So thank you to the entire Discovery Data team for making not just the list, but the platform possible.

Doug: Data makes everything possible at Discovery Data. So thanks for joining us, Mark.

Mark: Thanks for having me, Doug. Appreciate it.

Doug: For everyone at Discovery Data and The Data Possible Podcast team, we thank you for joining us.