FA Magazine July/August 2021 - Page 42

fa ’ s 2020 ria survey and ranking
clients can be done remotely , freeing up the advisors from those chores . “ You may have a superstar support person who ’ s in Scottsdale , and that ’ s better than having Door No . 3 unknown new hire that needs to be trained and may not stay with you .” This way , doors for talent can be opened up across networks , Welling says .
The firm recently hired a chief technology officer in Virginia and a chief marketing officer in Manhattan , and both will stay put in their home cities , Welling says .
Bob DiMeo at Chicago ’ s Fiducient ( the former DiMeo Schneider ) says the war for talent and the drive for scale are some of the bigger challenges facing the industry . There ’ s also a demand for investment research and proprietary asset allocation models that he says his firm sells to 50 other financial firms . “ That practice is red hot and has been our fastest grower over the past two years .” The firm advises on $ 230 billion in assets , he says .
There ’ s also upward pressure on salaries across all industries , he says , and the RIA space is not immune . Firms that don ’ t shift to a hybrid work model might find it costly , he says . “ We ’ ve added 20 people during the pandemic that never set foot in the office ,” he says .
Money Chasing Higher Multiples
“ There ’ s a lot going on with other people ’ s money ,” DiMeo says . “ When you look at the participation of private equity in our industry , you probably have some decisions being made that would not be being made if it were Bob and Eric going to their savings account and plunking these dollars down . The Fed ’ s zero interest rates have also likely played a part in valuations ,” DiMeo says . “ It feels to me like they are being priced beyond perfection .” If giant firms are paying multiples of 20 , as some sources say , “ Someday , that doesn ’ t make sense .”
Ben Harrison , co-leader of the wealth solutions business at BNY Mellon Pershing Wealth Solutions , a large custodian to the RIA space , says that if firms are turning to acquisitions to be their core growth strategy , they might be missing the big picture . “ Organic growth is often overlooked , and they spend a lot of capital and time trying to find the right strategic , inorganic acquisition because they see the roll-ups doing it , they see the others doing it and growing quickly , and organic growth is the number one driver for valuation in the marketplace .” Larry Roth , the managing partner of RLR Stra-
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