Focus Financial Partners and the U.S. RIA Industry in 2014
Since the 1970's, independent SEC registered investment advisors (RIAs) have been a growing segment of U.S. wealth managers, steadily winning market share from the dominant, traditional wirehouse broker-dealers. But, with more than $1.4 trillion in assets under management in 2013, the RIA industry is also at a crossroads, with aging advisors with limited succession plans and limited access to capital to fund intergenerational transfers, rising compliance and regulatory complexity, competition from new advice delivery models, and fragmentation. The case examines the RIA business model, the opportunities for growth through consolidation in this industry, and the competitive landscape in the wealth management aggregator sector through the lenses Focus Financial business model, its acquisition and M&A model for RIAs, and its wirehouse breakaway programs. The case examines Focus Financial strategy in the face of rising competition, potential growth paths, and IPO scenarios.
The case presents opportunities for students to explore similarities and differences between the broker-dealer and the RIA retail wealth management business models, strategies for growth and consolidation in the retail wealth management business, and issues related to incentives, organization and valuation of retail wealth management businesses.
Keywords: Financial Management; Growth and Development Strategy; Business Model; Financial Services Industry;
Citation:
Viceira, Luis, and Emily A. Chien. "Focus Financial Partners and the U.S. RIA Industry in 2014." Harvard Business School Case 214-103, June 2014. (Revised January 2017.) View Details