It’s been six months since the pandemic officially hit the United States and the market dropped swiftly and dramatically, but RIAs are still here. In fact, many financial advisors are getting closer with their clients and have harnessed technology to better prepare themselves for the future.
Technology has been at the forefront of conversations as remote interactions has become the centertain of work environments. Rather than separating clients from advisors, this has driven them closer together, allowing clients to be more open about where they want their lives to go in a post-pandemic world, rather than concentrating on the up-and-down movements of their portfolios.
Private equity, meanwhile, has fueled consolidation. Private equity investors have been fond of the RIA business recently, as they see a continued opportunity for growth in the sector. But that doesn’t mean both sides are on the same page, and a continued market slump could cause equity investors to question their long term relationships with the industry.
Outside of consolidation, there is still growth, however. For one, firms specializing in defined contributions have grown to match the size of players in the mutual fund world. While there is certainly still a high cost, technology-driven investment necessary to climb into the 401(k) specialization market, RIAs have proven themselves adept at integrating new technology during the pandemic and investments in technology have only proven to be worthwhile over the last several years, no matter what kind of business your firm is in--just look at TAMPs.
Over the next decade, technology will likely continue to forge new paths for RIAs and even in difficult times, it seems innovation continues to be the way of the future.
