Tim Welsh, director of marketing for Schwab Institutional, says the firm isn't surprised by the increased competition. "Actually, it's just a testament to the success of the RIA industry. They're growing, and other firms see the success and want to jump into the game," he says. One segment fueling industry growth is larger RIAs who previously served mainly institutional clients, he says. "Some are rapidly building private-client operations. Before they may have taken on high-net-worth clients as a side business, and now many of them are building capacity on the private wealth management side."
Schwab, he says, is adding to its RIA services this year by rolling out a suite of succession and transition planning services. Among them will be new workshops (which will cost $1,000 to attend) providing insight on the legal, organizational and financial aspects of improving their businesses and maximizing their choices as they look to transition their firms. Schwab also is introducing a confidential online listing service for advisors to buy and sell firms.
Fidelity, the next biggest player in the RIA market, also has plans to add services this year. "We added 14 sales and relationship management people in 2003, and we plan to add another ten this year. These people work in the cities and towns where advisors live and work. In 2004, we'll also be making larger investments in technology, and adding capabilities in trust, record keeping and custody," says Jay Lanigan, president of Fidelity's RIA group.
Fidelity is making an effort to introduce its services to advisors who have traditionally custodied their assets at banks or wirehouses and are looking to work with a service agent now, Lanigan adds. "We want to be known as the platform that supports independence and choice. Today we look to partner with advisors using that premise," he says. Fidelity added 490 new RIA clients in 2003, bringing it to almost 2,100 advisory clients with more than $90 billion in assets at Fidelity, he says.
Smaller market players also are very optimistic about building their RIA business. Phil Nicolaou, national sales manager for Rydex Financial Services and Rydex Funds, says Rydex launched its custody and trading platform for advisors in July 2002, and now has about 50 clients and close to $800 million in assets. "We're trying to turn ourselves from simply being a mutual fund company into an integrated financial services company that serves advisors," he says.
Peter Mangan is president and CEO of Shareholder Services Group, a San Diego-based firm that was launched in mid-2003 and is another young company aggressively seeking RIA business. Mangan says Shareholder Services is dedicated to serving only advisors, while other firms built their services for advisors after serving the retail investor. "We don't provide services to the retail public. Our only customer is one who comes through an investment advisor, so the investment advisor owns the relationship with the client."
Mangan formerly was the head of TD Waterhouse Institutional Services when the company created and launched Veo, TDW's online platform for advisors. SSG also has some very appealing new technology to offer advisors, including online account administration and reporting functions, Mangan says.