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FINANCIAL PLANNING | Top Trends and Best Practices for RIAs

Advisors now have the tools to make key choices themselves, including investment choices, providing greater flexibility for their clients. These advances in capabilities are the result of major investments by product providers, platforms, indie broker-dealers, custodians, and other industry players. “There has been a huge evolution in terms of options available to an RIA. I would compare it to walking into a Home Depot today versus a mom pop hardware store a few years ago,” says John Coyne, Vice Chairman at Brinker Capital.

New platforms are also breaking down barriers to investing in alternatives. CAIS, which terms itself is an exchange, is an example of how this works. Rafay Farooqui, co-founder and President of CAIS explains, “CAIS is a transparent venue for advisors to access in-demand financial products. We accomplished this by overcoming several challenges.”

Some of the seemingly insurmountable challenges advisors faced in the past regarding alternatives included the need for 3rd party institutional level due diligence but more subtly, operational due diligence, that the manager is operationally sound. Also, there are tremendous back office and paperwork complications when it comes to investing in alternatives, and so finding an appropriate custodian is key. CAIS has solved for these and other problems, by partnering with Mercer for due diligence and wealth consulting, and integrating custodians, including State Street, onto the exchange.

Platforms and exchanges such as CAIS provide true access to the best of the best of alternatives, and a leveling of the playing field with institutional investors. CAIS itself has four product lines: hedge funds; private equity; structured products; and precious metals. This last category includes physical ownership of precious metals, which allows advisors and investors to buy, store, and sell physical gold and precious metals (which are stored in insured vaults across the globe.)

Gold Bullion International, one such provider offering advisors with access to physical gold and precious metals recently launched GBI Advisors, and online portal that streams physical precious metals performance data from a client’s holdings into advisor reporting software. Such technological developments are empowering advisors to view precious metal allocations alongside overall client portfolios, a powerful resource in portfolio diversification.



How are RIA firms and their advisors implementing this increased potential for advisor control? Take HighTower, a national boutique partnership of high-end independent advisors. Mike Papedis, EVP, National Business Development for HighTower says, “We offer top-caliber teams the best of both worlds – the benefits of being an independent advisor and a fiduciary standard coupled with access to the competitive and sophisticated power of Wall Street. Our objective is to support breadth of capability and choice for fiduciary-minded advisors.”

HighTower’s innovative model is specifically built to foster competition among a wide array of providers for the benefit of advisors and clients, supporting choice of custodian, technology such as CRM and trading systems, and investment platforms. For example, HighTower supports several platforms to access alternative investment solutions, and through direct access, brings the advisor an expanded list of third-party investment strategies. According to Papedis, “Our research confirms the independent advisor has access to more alternative managers than are made available to the wirehouse advisor.”

Papedis notes that although some advisors are making trading and rebalancing decisions themselves, others are using a variety of platforms and due diligence tools to outsource investment decisions to third-party money managers. In either scenario, the advisor gains through increased control by utilizing advanced trading technologies and making the asset allocation decision, including which manager they are allocating to.

This search for options, and the ability to make choices, are what cause so many advisors to enter the RIA channel in the first place. Says Papedis, “Independent-minded and entrepreneurial advisors are leaving the wirehouses because they seek flexibility, freedom and greater capabilities. They want to be in the best position to make decisions that put the interests of clients first.”