EXCELSIOR CAPITAL PRESENTS

How the RIA Industry has Evolved

Andy Sathe is a Shareholder at MCF Advisors (a boutique Registered Investment Advisor with offices in Greater Cincinnati, Lexington and Louisville) where he serves as an advisor to business owners and clients who tend to prefer long-term relationships and thoughtful decision-making.

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Podcast: How the RIA Industry has Evolved

Andy Sathe is a Shareholder at MCF Advisors (a boutique Registered Investment Advisor with offices in Greater Cincinnati, Lexington and Louisville) where he serves as an advisor to business owners and clients who tend to prefer long-term relationships and thoughtful decision-making.

In this episode, Andy shares about the differences between a broker dealer, registered investment advisor (RIA), and trust company, and how each model evolved. Andy stresses that the fundamental question for clients should be what problem do they want to solve, not who they want to work with. The fee structure, business model, and incentives of a particular The RIA industry has seen a tremendous amount of consolidation in the last ten years, with private equity firms buying up firms in the space. This has been good for some, as economies of scale are gained, but it can also create issues, such as the loss of personal touch and succession planning. While the proliferation of RIA’s is great for clients, it can be confusing for advisors who may not be used to working with so many different firms.

Key Highlights

 [00:01 – 06:16] How Registered Investment Advisors Offer Clients More Choices

  • Registered investment advisors (RIAs) offer clients holistic, integrated investment management services
  • The RIA model evolved in the 1980s and 1990s to address the growing demand for personalized service
  • The incentives of a RIA should be the driver of decision making

[06:17 – 18:00] RIAs Advise Clients on the Pros and Cons of Private Equity

  • Why there are people who approach us who are really interested in running their own transaction
  • Why private equity is entering the retirement account space, but clients may not be happy with the experience
  • Private equity owners are looking for ways to save costs and increase profits, which could disrupt funds within the industry
  • Clients should ask their wealth manager about their ownership structure and capitalization, as any question could be on the table during a transaction 

[15:44 – 22:21] Real Estate Sponsors Remain Stable Amidst Uncertainty

  • There has been an increase in 1031 investors, a reduction in retirement account investment, and a decrease in purchase price from early in the year
  • The market is challenging and the value proposition for sponsors is harder to prove
  • The Fed wants rates to increase slower but terminal value will be higher than anticipated earlier

[22:22 – 31:51] Alternative Investments: A Guide to Keeping Clients Safe in a Volatile Market

  • There is a lot of volatility in the stock and bond markets, which is keeping many people up at night
  • There is a general feeling of angst among investors in the current market conditions, with many questioning why this downturn is happening and how long it will last
  • All we can do is reinforce the plan that has contemplate situations like this

[31:52 – 34:38] How to Profit from Market Volatility

  • There is a lot of change happening in the wealth management industry, with millennials becoming more involved in holistic planning
  • There is a shift from baby boomer to millennial planning, with robo advisors becoming more prevalent
  • There are opportunities for businesses to come in and automate parts of their planning process, bringing peace of mind to clients

 [34:39 – 36:55] Closing Segment

 

Additional Links:

Brian’s Linkedin: https://www.linkedin.com/in/brian-c-adams/

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