Growth with increased complexity is the future of custodians who hold the assets of registered investment advisers, according to a panel of industry executives, as RIA clients seek increased access to alternative assets, digital currencies as well as potential businesses to buy or merge with. .
This was the common thread of the senior management discussion on Wednesday morning at the InvestmentNews RIA Summit panel entitled “Improving the cost, efficiency and integration of childcare”.
There is no doubt that the industry remains on a path of strong growth, the executives said. Private equity managers swarm around RIA companies with $ 500 million to $ 1 billion or more in assets, looking to buy and merge companies into growing networks. And because cash is cheap due to low interest rates, financing deals remain attractive.
And the number of large RIA companies continues to grow, as the broader stock market continues its streak of record highs after the market fell sharply during the Covid-19 panic last year.
“Let’s talk for a moment about the growth of the profession,” said David Canter, executive vice president, RIA segment, Fidelity Institutional. “We have gone from a profession that had around 6,600 investment advisers registered with the [Securities and Exchange Commission] 2000 to present, ”with 13,880 companies, he said, citing an industry report.
“So the profession is growing, and what you can learn from big companies is very instructive,” Canter said. There are 851 wealth management companies with $ 1 billion or more in assets, he said, and of those, 166 have $ 5 billion or more in assets.
This begs the question, is $ 5 billion in client assets under management the new $ 1 billion, which means a new watermark for big companies, he said. And 75 RIAs now have $ 10 billion or more in assets.
LPL Financial has recently focused on consulting and managing practices to gain market share, said Marc Cohen, Executive Vice President, Consulting Solutions at LPL, and is looking to work with RIAs from a variety of backgrounds.
Asked about digital assets, alternative assets and cryptocurrencies, executives said custodians were targeting this area.
BNY Mellon / Pershing “invests heavily in the digital ecosystem,” said Ben Harrison, Managing Director and Co-Head of Wealth Solutions, Pershing. Pershing has set up a digital currency and asset business to explore the future of custody, blockchain, and crypto investing and how it’s going for RIA clients, Harrison said.
“It’s an incredibly important asset class and growing in value, I guess, as the markets continue to evolve,” said Bernie Clark, Head of Advisory Services and Managing Director of Charles Schwab.
Making sure assets are kept secure is task number one, along with creating access, Clark said. “We are currently seeing tremendous growth in alternatives on our platform, this is unprecedented, and I expect this to continue.”
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