Mega-RIAs Will Grow to Rival Wirehouses in Next Decade: Mariner's Bicknell

Approximately 85% of RIA firms aren’t growing above the market returns. I think it goes back to [lacking expanded] services.

Having all those services and making the [personnel] investment can help firms grow.

We have 125 tax professionals doing tax returns for our clients. That’s a significant investment.

A firm with scale has the ability to offer [such services] and absorb those types of expenses; smaller ones don’t.

You said that “demand” from clients is driving the move to add services. What are the implications if they don’t get them? They’ll move to another advisor?

If they don’t get the services they’re looking for, I think they will. We have north of 15% organic growth every year, and all those new clients are coming to our organization from other advisory [firms] because of our expanded services.

What are the challenges in working with ultra-high-net-worth clients?

They have a lot of needs and demands that are outside of what a traditional client needs. Being able to attract and retain the type of talent [to serve them] is a challenge.

Are those advisors able to serve them because of their experience or education, or both?

It’s all of the above: education and training and working with these types of clients for years.

What about the challenges in serving closely held family businesses, as your firm does?

It’s more of the same. The needs of a closely held business are legal needs, tax needs, banking needs, planning needs. 

That’s obviously outside the typical expertise of the [average] wealth advisor.

You went independent after being with A.G. Edwards for 16 years and only two years before the financial crisis hit. How did your new firm get through it?

Had I known what was coming around the corner, I don’t know if I would have had the nerve to start the firm.

But had that been the case, I would have missed the opportunity of my lifetime.

Please elaborate.

In 2008-2009, financial services firms were making decisions just to stay alive, and high-quality talent didn’t really like those decisions. So we could hire people of quality that a firm our age and size normally wouldn’t have been able to attract.

In an 18-month period of time, we probably tripled the [number] of our employees.

Five years from now, how do you think the financial advisory industry will have changed?

There will be continued consolidation. Acquisitions will continue to accelerate. 

We have 1,800 advisors, but Merrill, UBS and Wells Fargo have something like 15,000 or 17,000 [each]. So we’re not even close to their size.

But in five to 10 years, there will likely be a handful of truly large independent RIAs that can rival the size of the wirehouses.

Do clients actually know how an RIA differs from a wirehouse?

I don’t think very many clients do. But I think clients know their advisor and trust their advisor regardless of the firm the advisor works for.

I read a study that says most investors don’t trust financial services, but almost all of them trust their financial advisor.

What’s your outlook for the economy and stock market for the year? 

Optimistic. We think that our projection for the stock market for 2024 was already met in the first six months.

There’s no reason, from an economic standpoint, [not to be] optimistic. Inflation has cooled down; it looks tame again. There’s no reason to believe that corporate earnings won’t continue to increase.

How much longer will only a small number of super-large tech companies be responsible for the record-breaking stock market? 

We think that has already started to broaden out and will continue to. There will definitely be a leveling off of the Magnificent Seven [stocks]; that is, they aren’t going to be the only driving force of returns for the rest of the year.

[Many] firms have underperformed, and a lot of investors are thirsting for opportunities from the companies that haven’t participated yet.