Focus On Growth

Worries, Anyone?
One of the big recent trends in the advisory space has been the rise of robo-advisors, those online advisory platforms that some people believe are a threat to human investment advisors. But others say they might actually cause advisor firms to up their game.

“I think robo-advisors will put a lot of value pressure on the business,” says Russ Hill from Halbert Hargrove. “You better be doing something to add value that’s meaningful to clients other than just putting together a portfolio of index funds. That something could be wealth management or manager research.”

Regulatory issues are another concern. “Regulation is one of the biggest things we worry about,” says Wendy Dominguez, principal and president of Innovest Portfolio Solutions LLC in Denver. “What will that look like, what resources will need to be diverted to comply with increased regulation, and how will that affect our firm?”

Nonetheless, Innovest thrived last year with asset growth of 28%, to $7 billion. Rising financial markets helped, but so did old-fashioned customer service across its main business units of wealth management, foundations and endowments, and retirement plan consulting. “It starts with doing a good job with our existing clients,” Dominguez says. “We have a very high retention rate, and we get a lot of referrals from our clients.”

As it grows, Innovest is creating jobs and helping to bring new blood into the industry. “We keep a constant client-to-employee ratio of 7 to 1, and as we bring on new clients we want to keep that ratio, so we keep hiring,” Dominguez says. She notes that the company typically has two to three interns at a given time working at Innovest, and she anticipates hiring additional full-time staffers during the last four months of this year.

Dominguez says the firm is mindful of a slowdown in the U.S. markets, and as a result is tweaking portfolios and prepping clients to expect lower returns during the next five years versus the prior five years.

“Our outlook is we see sunny skies with possible clouds on the horizon, so we’ve got our umbrella ready,” she says.

And probably the same could be said for the RIA space in general. The skies look mainly sunny now, but it’s a good idea to be mindful of the distant clouds.