Market expansion is an exciting yet complex challenge for Registered Investment Advisory (RIA) firms. When an RIA wants to expand their practice, add new advisors, and establish offices in new regions, they need structured RIA growth strategies requiring careful planning, strategic hiring, and a well-defined approach to entering new markets. Without clear RIA growth strategies, firms risk overstretching resources, struggling with recruitment, and failing to establish local credibility.
In this blog, we’ll explore key considerations for RIAs looking to grow, including where to expand, hiring practices, and how to build a strong presence in new markets.
Deciding Where to Expand Your RIA
One of the biggest mistakes RIA firms make is expanding into a new market without carefully evaluating it for opportunities and risks. Opening a new office or adding advisors in a region without a clear client acquisition strategy can drain resources without delivering sustainable growth.
Key considerations when selecting a new market include:
- Client demand – Assess whether there is a significant need for fiduciary financial advisory services in the region.
- Competitive landscape – Determine whether the market is saturated with large national firms or if there is an opportunity for a new advisory firm to establish a foothold.
- Regulatory environment – Review state-specific compliance requirements that could impact operations.
- Existing beneficial relationships – Evaluate whether the firm has Centers of Influence (COIs) in the area that can help drive referrals. Strong relationships with local CPAs and attorneys can generate early leads.
- Advisor availability – Consider whether the firm can recruit 1099 or W2 advisors in the target region to support client growth.
RIA leaders should conduct a market feasibility study to analyze the opportunity and potential risks before committing to an expansion, including evaluating market trends and assessing infrastructure requirements.
Hiring Advisors for Expansion
A real challenge facing RIA firms expanding into new markets is deciding between 1099 and W2 advisors.
1099 (independent contractor) advisors have lower overhead costs and have the flexibility to work remotely or in satellite locations. They may bring existing clients or self-sourced leads from their independent work, but they may be less connected to the RIA, its long-term goals, and its culture than full-time employees. Independent contractors can be difficult to attract if they know they are competing with employee advisors who will receive most of the firm-generated leads.
W2 (full-time employee) advisors are more aligned with the firm and its long-term goals. It is easier to manage lead distribution with full-time staff, and they are more likely to stay in the position long term. However, full-time employees require full-time salaries and benefits, and placing them in remote or emerging markets may be difficult.
When determining the best hiring strategy for expansion, firms should consider which hiring strategy will work based on the firm’s existing infrastructure and market dynamics. If the firm is entering a new market without an existing office, starting with contractor advisors who can operate remotely is less expensive and carries less risk. The firm can test the market before investing in a full-time office and staff.
Once the firm has established steady lead flow and strong COI relationships, they can enhance customer service and revenue by adding an office, staff, and additional advisors.
Leveraging COI Relationships to Enter New Markets
To strengthen the potential for success when entering a new market, RIAs should focus on establishing credibility and finding new clients. Since most high-value client referrals come from COIs like CPAs and attorneys, it’s critical to build strong local partnerships.
RIA’s can build a strong COI network in a new market by identifying key influencers – including CPAs, estate attorneys, and business consultants – and cultivating these relationships through networking events, sponsoring local financial seminars, and forming personal connections. Offering educational content, webinars, or co-branded events can help establish credibility and goodwill before the RIA begins seeking referrals.
In some cases, assigning a dedicated COI resource can help. By focusing solely on COI relationship-building in new markets, they can facilitate relationships and accelerate the firm’s growth in the market.
Marketing & Brand Awareness in a New Region
A new office won’t succeed without effective marketing and brand positioning, including a mix of local branding, digital marketing, and community engagement.
Key marketing strategies for RIAs expanding into new markets include:
- Use geo-targeted ads and search engine optimization (SEO) to increase visibility for “financial advisor in [new location].”
- Publish blogs, case studies, and whitepapers focused on financial issues relevant to clients in the new market to boost credibility and awareness.
- Sponsor local events, join professional associations, and participate in regional advisor conferences to network with members of the community.
- Encourage existing clients to refer new prospects by offering incentives such as fee discounts or value-added services.
RIA firms should consider working with consultants specializing in financial services marketing to develop an expansion-focused branding strategy.
Measuring Success & Adjusting the RIA growth strategies
Once the RIA enters a new market, tracking key performance indicators (KPIs) helps determine whether the expansion is on track. At a minimum, RIAs should measure the number of new clients onboarded each quarter in the new region, COI referral conversion rate, lead generation cost per new client acquired, revenue growth in the market, and rate of retention for new advisors.
If these metrics fail to meet expectations, the firm may need to adjust its hiring strategy, COI outreach efforts, and marketing approach or reevaluate the viability of adding an office in that market.
Building Scalable RIA growth strategies
RIA firms looking to expand into new markets need a structured approach to expansion. They must carefully evaluate where to expand, how to recruit advisors, and how to establish a strong referral network. By selecting the right markets, hiring strategically, and employing smart marketing tactics, RIAs can successfully expand into new locations without overextending their resources.
If you are ready for RIA growth strategies, Pohl Consulting can help. We have decades of experience helping small to mid-sized financial services firms transform their operations and accelerate growth. Contact us today to learn how we can help you meet your growth goals.
