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They have a plan for smaller accounts. The best small firms develop specific strategies or models for smaller accounts and then use a model-based trading platform to make decisions at the model—not account—level. Trading at the omnibus level—where account-level trades get aggregated into one model-level block trade—and asset-based pricing (no ticket charges) also help smaller accounts from being eroded by fees.
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They provide a client-centric service model. Leading small firms make their clients feel valued. They build deeper relationships and form more personal connections. They set the right expectations and provide the right services based on those expectations. And as they automate back office and investment management tasks with the right technology, it frees up time to spend on a high level of client service. Many of these smaller RIAs touch their clients in one fashion or another on a monthly basis.
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They differentiate themselves. In the competitive marketplace, the best small firms understand the importance of building their brand and differentiating themselves. They have a carefully developed value proposition that they clearly articulate to their clients. A strong brand helps small firms keep their services from being perceived as a commodity, and helps them establish deeper bonds with clients and connect more powerfully with potential clients.
To paraphrase Mark Twain, the reports of the death of the small RIA firm have been greatly exaggerated. Smaller firms are thriving and growing and serving their clients incredibly well. They do so by using technology as a game changer, a high-touch service model to support and grow their client base, and they work only with partners who truly support their business model and serve the RIA the way the RIA serves their clients.
Joshua Pace is the president and CEO of Trust Company of America.