Case study: Using customization as a differentiator to drive inorganic growth

Avatar photo by Michael Camp, CFA, Head of Client Solutions

A small RIA Aggregator with big growth goals

An emerging RIA Aggregator in the early stages of their development realized they were facing many obstacles in reaching their goals. Their current roster of advisors brought with them books of business that tilted heavily towards smaller retirement accounts, and these legacy accounts had multiple custodial relationships and differing fee structures to manage.

To grow the firm, they recognized that they had to streamline operations, align around a unifying investment philosophy, and add additional services to their tech-stack if they wanted to attract advisors that serviced the emerging wealth and high-net worth investors while not inhibiting their ability to drive operational scale.

The Challenge: Developing an investment philosophy that can unify a diverse group of advisors

  • To attract new advisors and achieve their ambitions of growing their firm by 5X in a five year window, the firm focused their offering around three strategic pillars:
  • Continue to have laser focus on utilizing scalable systems and processes
  • Services that meaningfully differentiate themselves from the competition
  • A more thoughtful approach to portfolio construction & implementation

Integrating an advisors’ book of business on to their platform without taking on the management of countless different investment portfolios would prove to be a challenge in fulfilling their goal of having a unified approach to portfolio construction while retaining a sense of personalization and customization. The firm needed to create unique solutions that meet the needs of a large and diverse client base but can be scaled to help meet the operational needs of a firm in hyper-growth mode.

The Solution: Customized models focused on tax management

To achieve their goals, the firm started by identifying the right asset manager, one that had a suite of models that could serve as the foundation for their investment philosophy. 55ip was then identified as being the right technology partner that “Checked all three of the boxes” in support of their strategic pillars while still allowing them flexibility to configure a broad range of technology solutions.

Working with the asset manager, 55ip was able to help deliver the RIA’s investment vision by providing implementation options following the development of a full suite of custom model solutions. Customizations were built into two in-house models and six custom model solutions, with a combination of risk mitigation and tax-management being the driving factors. 55ip then put these inputs through their proprietary Model Management Utility to quickly develop the custom models, reducing the development time from months to days.

Delivering these models through our tax-smart investment strategy engine, the firm believed 55ip had an intuitive user experience coupled with sophisticated client proposals that could provide a level of confidence to their advisors that the combined investment solutions would help meet the needs of their financial planning. The final offering was broad enough to meet the needs of existing clients, while providing prospective advisors with a sense that in joining the firm they still maintained what they valued most – freedom, flexibility, and control.

The Outcome: A thriving business that is hitting its target

With these new custom model solutions in place, the firm had the right strategies to attract advisors who focus on emerging- and high-net worth clients. Through a combination of inorganic and organic growth, the firm has hit its short-term growth goals and is on track to reach their long-term goals ahead of plan. In the last two years of the partnership, this firm was able to complete over ten inorganic acquisitions and transition their accounts in the firm’s models. Driving over $700 Million in new assets under their management.

The firm uses 55ip’s tax transition services to integrate a new advisor’s legacy portfolios into the suite of custom models. Using a zero-tax budget, Advisors can thoughtfully integrate their business into the firm and 55ip, working with the trading team, is able to manage the operational aspects to free up the advisors’ time and allow them to focus on growing their business.

The firm has leveraged 55ip’s scale for the taxable accounts at every opportunity, freeing up the operations team to focus on the qualified accounts internally. The firm reports that newly acquired advisors have overcome the initial learning curve to become heavy adopters of the 55ip Tax Transition services and efficiently move client accounts into the suite of custom models that we helped them design and execute.

If you’d like to learn more about 55ip’s ability to deliver your vision through our custom model solutions, click here to schedule a meeting.

Keep Reading

Related Insights