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COVID-19 may quickly expose that McKinsey's 2030 vision report ill-advisedly reprises Mark Hurley's 1999 logic about classic RIAs as easy marks for 'enterprises'

The New York-based consultant sees bigger, more digital companies (Wall Street 2.0 in other words) dominating -- a de facto logical black hole that desk-bound consultants gravitate to.

Author Oisin Breen April 7, 2020 at 8:01 PM
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Kevin Sneader: Our era will be defined by a fundamental schism: the period before COVID-19 and the new normal that will emerge in the post-viral era.

Paul Miguel

Paul Miguel

April 7, 2020 — 10:48 PM
It depends what type of Guidance you are trying to deliver. Many Advisors leave large Shops to start RIAs or become IARs with the goal of delivering their absolute best Financial Planning &/or Portfolio Management Ideas in a Boutique setting, and to a smaller set of Families or Institutions. It becomes harder to deliver true personalized guidance once you start spending most of your time worrying about competing in areas Technology, AUM growth & Cross Selling with the Big Banks.. The RIA model was never really designed for those who wanted to see their Firm names on Commercials or Blimps. The SEC definition of a "Large RIA" is 100mm under Assets., but even if it is redefined as a firm with 1 billion in AUM, you can be successful by sticking to the Fundementals. In order to get where a lot of Advisors want to get in this model its less about Technology, Scalability, & Price and more about delivering what is actually Rare & Valuable. 1. The Advisor Client relationship & Clarity, Context, & Parntership that comes with it. 2. A Fiduciary Best Ideas approach to improving client experiences & outcomes through critical thinking.
Brooke

Brooke

April 7, 2020 — 11:19 PM
Critical thinking -- exactly.
Steven Draper

Steven Draper

April 8, 2020 — 1:25 PM
I think you can "read" the McKinsey White Paper in several ways, but hopefully agree that the business WILL change over the decade. The factors that will be the drivers of that change will be those that matter most to the client. I would suggest that in trying to meet those expectations many businesses will reach an operational "ceiling", a point where just adding people does not work. The McKinsey points revolve around the business model that will survive, that will be successful, that will be able to meet client expectations.
Jeff Spears

Jeff Spears

April 8, 2020 — 3:18 PM
Hopefully this crisis causes all of us the question what is important in life and in business.
John Phoenix

John Phoenix

April 8, 2020 — 5:11 PM
I chuckle every time I read about the demise of the RIA. For the last two weeks I have witnessed firsthand a breakaway from captive to RIA (during a pandemic and market collapse) and marveled at the strength of the relationship between advisor and client. Our friends at McKinsey have never sat at the kitchen table. Maximizing time, the most valuable resource RIA's have, should be the focus of every advisor especially today. Advisor time spent on non-client facing activities is time wasted. Efficiently outsourcing and expanding your services menu is the way to ensure your firm's success and drive future growth both organically and inorganically.
FAA

FAA

April 8, 2020 — 5:58 PM
I can actually see where McKinsey is coming from as this could be seen in a similar light as the asset management business a number of years ago. Talented investment managers left big banks (Where did Invesco come from? Or Brinson Partners? ) or insurance companies (Where did Pimco come from?). They left for similar reasons advisors leave Wall street like firms- realign client advisor interests, compensation, independence, etc. Bernstein wrote a seminal paper a number of years ago on the asset management business on 'Bigger is Better'- get big or don't survive. So, theses asset managers either bought others or were bought. Now you have these very very large asset managers (Blackrock, Vanguard etc.) who dominate due to pricing power, technology, marketing etc. Their investment products aren't much different if at all. The RIA prospectively could face something similar particularly with information and technology more accessible to the client. So the advisor may need to be very very good at being very very special in the eyes of their very very few clients or get very big and very cheap.

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