The Wealth Management Digest

Transcript: Welcome to this week’s Zoe’s Wealth Management Digest. 

We have three topics to cover today. The first one is Fidelity’s benchmark study for RIAs that came out recently. The second one is the Black Diamond announcement of a CRM – they’re launching a CRM. The third one is Envestnet’s announcement of a delay in their custody platform.

The Fidelity benchmark study came out heavily anticipated. They surveyed hundreds of RIAs around the country. The main takeaway is that, on average, RIAs that manage over a billion dollars saw an organic growth rate of 3.6% on average in 2022, which is much lower than what they saw in 2021 at 8.4%. This excludes market appreciation and M&A and that kind of noise. Frankly, this doesn’t surprise me. When we interview RIAs around the country and speak to hundreds each year, most of them don’t grow that fast. They grow at, say, somewhere between 3% to 8%, maybe 10%. The reason is that they rely on client referrals for growth, which is excellent. I mean, clients like them. But that’s not a scalable channel. Once you get above a billion dollars, the few RIAs that we do see growing much faster have other scalable channels to grow. They have a business development side. They spend on marketing not just 2% of revenue but 10% or 15% of revenue. So, this doesn’t really surprise me. 

Second headline: Black Diamond launches a CRM. The devil’s in the details here, but it’s essentially what they did: reconfiguring Salesforce to make it more specialized for what an RIA would want. We’ll see how the execution of this will play out. But it’s Salesforce. 

The third one is Envestnet, which announced a second delay of its custody platform to mid-2024. It was initially supposed to come out this quarter, but then they delayed it to the first quarter of next year. Now, they’re delaying it to mid-2024. What’s the takeaway here? It’s hard to get the timelines right when you have a bunch of different parties trying to align on launching something this big. 

All right, that’s it for this week. Stay tuned for next week.

– Andres