The evolution of the RIA has been one of the great success stories of the modern financial services industry. Just 20 years ago, RIAs were essentially a collection of small "mom-and-pop" firms-each one offering personal service focused on local communities.

Investors have rewarded RIAs well for that client focus, and this one-time cottage industry has become a huge part of the financial services landscape. Today, there are more than 16,000 RIAs collectively managing $2.7 trillion in assets (according to Cerulli Associates, company reports and Charles Schwab estimates). There are more than 500 firms managing $1 billion or more, according to 2009 Schwab data. What's more, several RIAs are now extending their footprints beyond Main Street by expanding into multiple states and regions. The RIA model is also gaining popularity with advisors and investors overseas.

As a result of this success, an ecosystem of companies has emerged to serve independent advisors in essentially all areas of their practices-from investment products and platforms to services such as technology, compliance, portfolio management and client reporting. Many of these product and service providers focus entirely on the RIA space, devoting themselves to advisors' unique needs. Advisors today can access a huge number of resources tailored specifically to the way their firms operate.

Of course, these developments haven't completely eliminated the challenges that this industry faces. RIAs' success has made their business a more competitive one. The number of new entrants to the space continues to grow, making it more difficult for firms to stand out from the crowd. Meanwhile, other types of advisors are attempting to co-opt those key attributes that have traditionally given RIAs their competitive advantage, such as their fee-based models and their roles as fiduciaries.

In tomorrow's marketplace, RIAs will need to differentiate themselves beyond the existing RIA characteristics. In particular, advisors will need to manage their brands, their processes, their technology and virtually all the key areas of their practices like an enterprise. This approach will be helpful in attracting both talented personnel and the types of clients that are becoming increasingly important to advisors' future growth.

In short, advisors must bridge the gap between the service-oriented boutique and the professionally run enterprise. To make that happen, advisors should focus on three main things:

They must develop a strategic plan. Strategic planning is a driver of many top firms' success today. The top 20% of independent, fee-based RIAs in Schwab's RIA benchmarking study make a point of creating strategic plans for the future direction of their businesses and then use them to guide all their decisions. And yet, as important as strategic planning is to firms' success, it is largely ignored. Fewer than 50% of RIAs have strategic plans in place, according to the study.

Creating strategic plans may be a key component of advisors' success in the coming years. As more advisors enter the RIA space-either directly or after transitioning from another model-the growth won't be as easy to come by as it has been. Advisors will need to do more to stand out from the competition in order to attract ideal clients (and serve them well), and also take care of legacy clients. They will need to set growth targets and determine how to meet them. They will need to know how to best allocate resources to both client service and business development and determine where to find those resources. And they will need to put their goals to paper and ensure their employees fully understand their plans so that everybody in the firm is fully committed to achieving them.

Strategic planning that spells out a firm's short-, medium- and long-term goals (and provides a road map for everyone involved) will be crucial to making these and other mission-critical decisions intelligently.

Advisors must segment their clients. The percentage of RIAs who segment their clients into distinct groups (based on their specific needs, affinities, behaviors and other characteristics) rose to 39% in 2010, up nearly 10 percentage points from 2009, according to Schwab's benchmarking survey.

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