How Fidelity’s Helping Smaller RIAs ‘Get to the Next Level’

The higher rate of U.S. inflation, heightened market volatility and increased business expenses account for a 40% decline in RIA assets under management, according to Fidelity Investments’ 2023 Benchmarking Survey. Organic growth dropped from 8.2% in 2021 to less than 4% in 2022.

“Organic growth is one area where we’ve seen a challenge across the board,” Noni Robinson, head of emerging RIA at Fidelity Institutional, says in an interview with ThinkAdvisor.

In the smaller and mid-sized RIA segment, organic growth is a significant issue since these firms typically lack dedicated staff to help them “evolve to the next level,” Robinson notes.

But Fidelity, among other firms, is making a concerted effort to help such custody clients by supporting them in such areas as technology integration, operating efficiencies, scaling and portfolio construction.

Other areas of RIA concern are cybersecurity and attracting talent. In the interview, Robinson cites a Fidelity white paper that details five areas of focus for drawing talent, like creating “a destination workplace.”

Robinson, who joined Fidelity in 2022 after more than 23 years at Vanguard — most recently as head of retirement plan client services of the Institutional Investor Group — explains much of the plan for RIAs that she developed. That includes Acceleration, a program now being rolled out that’s designed specifically for smaller high-growth RIAs.

In the interview, Robinson says that Fidelity hired her to provide “a refreshed vision and strategy” for the emerging RIA segment of the firm’s custody clients.

Here are highlights of our conversation: 

THINKADVISOR: What’s the biggest challenge facing both emerging and long-established RIAs?

NONI ROBINSON: There are a few prevalent trends we’ve identified. In our 2023 Benchmarking Study that [covered] 2022, a couple of things rose to the top.

No. 1: Organic growth is one area where we’ve seen a challenge across the board. It dropped below 4%, down from a high in 2021 of 8.2%. So this is an area of focus for RIAs.

We’re currently conducting our 2024 study, which will include analysis of 2023 performance.

What caused that big decrease?

A couple of headwinds contributed to it: higher inflation, higher market volatility, increased expenses in running their businesses.

Of course, there’s been a lot of merger-and-acquisition activity with larger firms [buying smaller ones]. So organic growth has been a challenge for many RIAs.

What else is an issue for emerging and mid-sized RIAs?

The tech stack: These RIAs have six or more technology solutions that they’re using to run their businesses.

The integration of [all those] can become challenging. This too is an area of focus for most RIAs regardless of size.

What do small and mid-sized RIAs need from your team that larger firms typically would not?

Many small RIAs have only one to three people in their offices. They often don’t have a dedicated chief technology officer or a dedicated business development function. So they’re wearing lots of hats.

Because many of the smaller RIAs don’t have [a big] staff as the larger RIAs do, they’re looking to us to provide expertise and additional support.

For example, they’ll have questions about technology integration and comparing different options to customize their tech stack.