New Study from The Bank of New York Mellon's Pershing Advisor Solutions Unit Identifies RIAs Most Significant Threats, Opportuni
August 14 2007 - 9:00AM
PR Newswire (US)
JERSEY CITY, N.J., Aug. 14 /PRNewswire-FirstCall/ -- The Pershing
Advisor Solutions LLC unit of The Bank of New York Mellon and Moss
Adams LLP have released a new study entitled Uncharted Waters:
Navigating the Forces Shaping the Advisory Industry. As a component
of Pershing Advisor Solutions' Ideas Without Limits practice
management program, the study provides independent registered
investment advisors (RIAs) with a comprehensive overview of dynamic
challenges facing the advisory industry and the influence these
market forces will have on RIAs' abilities to effectively service
their clients and successfully grow their businesses in the future.
The study reports that the RIA market will continue to experience
rapid growth, estimating the number of retail-focused advisory
firms will grow to over 19,000 from the current 15,500 in the next
five years. Leaders of independent advisory firms will be
increasingly challenged by expanding market competition and more
sophisticated, demanding clients, which in turn will place greater
importance on attracting and developing bench-strength to help grow
their practices. Essential to maintaining their current strategic
advantage, advisory firms will need to educate consumers, take new
steps to frame the publics' understanding of advisory services, and
in so doing, clearly define the industry's quality standards. The
top three challenges that RIAs will face over the next five years
include: -- Dramatic Growth of the RIA Market Expected to Fuel
Increased Competition - Demand for comprehensive and objective
financial advice is growing rapidly. The study predicts that the
average independent registered investment advisor will exceed $1
billion of assets under management by 2012. Furthermore, from an
industry standpoint, this expected growth in assets represents a
new annual revenue opportunity of $35 billion by 2012. Although
growth is expected to remain robust, wirehouse brokers, insurance
agents, bankers and mortgage brokers are creating more intense
competition and less differentiation as their business models
evolve to include services previously exclusive to RIAs; -- Growing
Demand for Advice from Increasingly Sophisticated Clients - RIAs
have enjoyed a strategic advantage for the last five years as
consumers sought objective advice and a departure from commission-
based compensation models. However, as competitors converge and
consumers' needs change, the window of opportunity for RIAs to
compete strategically is threatening to close. To be successful,
RIAs will need to distinguish themselves from new competitors,
explore opportunities to be more specialized and identify
meaningful market niches where they can lend expertise; --
Competition Among RIAs is for Top Talent - Seasoned expertise is
critical to an advisory firm's success. Moss Adams forecasts that
by 2012, there will be close to 52,000 independent registered
investment advisors practicing inside RIA firms. According to the
study, 37% of advisory firms are actively recruiting RIAs. Creating
an environment in which motivated employees can flourish plays an
integral role in developing and retaining top talent. For advisory
firms to stand out and position themselves as trustworthy, credible
and knowledgeable, they must consistently attract high-quality
independent registered investment advisors who, in turn,
demonstrate these attributes to their clients. John Iachello, chief
operating officer of Pershing Advisor Solutions LLC, said, "As the
business landscape and RIA market both continue to rapidly evolve,
especially in light of changes driven by the Pension Protection Act
and the recent ruling surrounding fee-based brokerage accounts,
independent registered investment advisors will continue to face
unique challenges to service their clients and grow their
businesses. Our new independent study, Uncharted Waters, identifies
these key challenges and provides RIAs with compelling information
and insights to help them navigate through these changes so they
can build and maintain a more successful practice." Mark Tibergien,
principal at Moss Adams LLP, said, "To capitalize on their current
competitive advantage, registered investment advisors will need to
develop niche segmentation strategies that consider a variety of
client needs and carefully positions their service offerings
against competition from the broad investment industry. What has
worked for RIAs over the past five years will not necessarily yield
the same results over the next five years." The study, which was
commissioned by Pershing Advisor Solutions LLC and independently
executed by Moss Adams LLP, was highlighted at INSITE(TM) 2007,
Pershing's annual financial products and services conference. For a
copy of the executive summary and full report, please e-mail
Pershing Advisor Solutions at . Pershing Advisor Solutions LLC
(member NASD/SIPC) is an affiliate of Pershing LLC and a leading
provider of financial business solutions to independent, fee-based
registered investment advisors and dually-registered advisors
working in conjunction with many of Pershing LLC's introducing
broker-dealer customers. Pershing LLC, a subsidiary of The Bank of
New York Mellon Corporation, is committed to service excellence and
to providing dependable operational support, robust trading
services, flexible technology, an expansive array of investment
solutions and practice management support. Through an innovative
custody platform, Pershing Advisor Solutions delivers superior
expertise and scalable and customizable solutions to help its
customers manage and grow their fee-based businesses. Additional
information is available at
http://www.pershingadvisorsolutions.com/. The Bank of New York
Mellon Corporation is a global financial services company focused
on helping clients manage and move their financial assets,
operating in 37 countries and serving more than 100 markets. The
company is a leading provider of financial services for
institutions, corporations and high-net-worth individuals,
providing superior asset management and wealth management, asset
servicing, issuer services and treasury services through a
worldwide client-focused team. It has more than $20 trillion in
assets under custody and administration and more than $1 trillion
in assets under management. Additional information is available at
http://www.bnymellon.com/. DATASOURCE: The Bank of New York Mellon
Corporation CONTACT: Barbara Gallo, of The Bank of New York Mellon
Corporation, +1-201-413-2930, Web site: http://www.bnymellon.com/
http://www.pershingadvisorsolutions.com/
Copyright