Small Firms Will Still Be Viable Even As Larger Independents Continue To Consolidate

Friday, December 07, 2012 07:56
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Small Firms Will Still Be Viable Even As Larger Independents Continue To Consolidate

Tags: Advisor businesses | registered investment advisors

Consolidation in the independent RIA market may result in a series of $100 billion firms in assets under management dominating the market.
 
What does that mean for smaller firms, say, with assets of $100 million or less? Will they just be gobbled up?

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Some predict smaller firms will thrive, even without the benefit of the scale bigger firms can employ.
 
There’s no doubt that streamlining technology and creating scalable models will improve your business.
 
But even clients of medium size firms who are not able to scale their models or integrate their technology are getting attention and have trustworthy custodians.
 
Danny Sarch, CEO of executive search firm Leitner Sarch Consultants, says TD Ameritrade seem to specialize in serving small to mid-size RIAs.
 
Wirehouse brokers will continue to migrate toward independence so small and mid-size RIAs will continue to be formed.
 
You can open an RIA with only $50 million in assets. That equates to $500,000 in income, which is a nice living.
 
Technology is only going to become more accessible and there is a lot that’s off the shelf now.
 
So there’s should be plenty of room for small to mid-size firms even as bigger firms continue to consolidate.
 

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