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How 'Sophisticated Planning' is an RIA Differentiator

By Crucial Clips     July 14, 2020
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, Feb. 6, 2020 

RITA RAAGAS DE RAMOS, SPECIAL PROJECTS MANAGER, FINANCIAL ADVISOR IQ: Hi. I'm Rita Raagas De Ramos from Financial Advisor IQ, and with me is John Bahnken, president of Citizens Bank Wealth Management. So many RIAs market themselves as fiduciaries and as providers of value-added advice. What would it take for an RIA to be differentiated among the rest of the pack these days?

JOHN BAHNKEN, PRESIDENT, CITIZENS BANK WEALTH MANAGEMENT: I think RIAs are not only fiduciaries -- I think they are -- but I would say most providers in the high net worth, ultra high net worth space do act in that capacity. So there's not all that much in the way of differentiation from a pure fiduciary place, I think, that exists.

But I think the way RIAs are increasingly differentiating themselves is through very sophisticated planning capabilities, whether it's tax planning, financial planning, estate planning, and being able to add that to the investment offering and delivering that in a fiduciary-type way is sort of a combination that works best for advisory firms today.

RITA RAAGAS DE RAMOS: How can RIAs ensure that they're giving their clients their money's worth when they're charging their advisory fees?

JOHN BAHNKEN: Well, I think different firms have different ways of charging fees. So some use purely fees. Others charge for particular services -- financial plans and things like that -- so they use more what I call an unbundled pricing structure around that. And I think the client has to decide what's best for them and their family. But I think the way value is actually provided today is much more on the planning side of the equation.

On some level, investments are always very, very important, but they've become a bit commoditized. And so I think that the advice is truly what differentiates advisors today.

RITA RAAGAS DE RAMOS: What are the challenges of building an RIA business now?

JOHN BAHNKEN: Well, I think the biggest challenges that RIAs have today is distribution. So where do they get their clients from? So there are very, very many very fine RIA firms that are out there, but they have a really difficult time growing because they are depending upon sort of friends and family types of referrals to help fuel their growth.

The big advantage that the larger firms have, and I would say banks, in particular, in this space, is we have huge numbers of clients who are looking for those types of capabilities. So if you build really strong capabilities, we have a great distribution network where clients are doing business with the company today and you offer them wealth management products. So it's a real competitive advantage for the larger firms.

RITA RAAGAS DE RAMOS: Thank you, John.

JOHN BAHNKEN: Thank you very much. It was nice talking to you.

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Tags:  Finding and winning new clients , Staffing and recruiting , Investment strategies , Retirement planning , Tax planning , Estate planning , Insurance planning , Portfolio management

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