Moore’s Law is an observation that the number of transistors in a dense integrated circuit doubles approximately every two years. Gordon Moore, co-founder of Fairchild Semiconductor and Intel, made the observation in a 1965 white paper. Even though Moore’s Law is a projection and not a physical and natural law, it does help us understand the environment that financial advisors live in. Change is not only constant, but the rate of change is increasing with greater speed in each passing year. To the extent that a Registered Investment Advisor (RIA) effectively faces and embraces change, they can continue to “reinvent” themselves as a relevant and valuable resource for an increasingly sophisticated investor.

The Investor

In our day-to-day business, we talk to a number of RIAs. Recently, we are hearing RIAs say, with greater frequency, that their clients are changing and becoming much more proactive. They are seeking out solutions independent of the advisor. Of course, much of this change is being caused and supported by clients who are empowered by information, both good and bad, from the internet. Even older demographics, traditionally less likely to adopt new technology, are becoming more tech and research savvy. And Millennials are almost single-handedly fueling the growth a huge change agent of the RIA World…the Robo-Advisor.

Indeed, the investor of 2017 is better educated and more opinionated than ever. They are rapidly adopting “FinTech,” the use of computer programs and other technology to support or enable banking and financial services. But, despite all the tech advances, investors across multiple demographics are still responding to the “high touch” of a savvy, intelligent and resourceful financial advisor. In short, the consumer wants collaborative thought leadership.

The Advisor

Generally speaking, the RIA world has been slow to adopt to changing technology in business. Security and regulatory concerns alone were enough to keep many firms “on the sidelines.” Yet, there is growing evidence that embracing technology has a direct correlation to AUM growth. And the trend is clear, the adoption of CRM, financial planning software and portfolio management platforms are having an impact on growth. RIA in a Box recently published the following compelling review of the adoption of FinTech by RIA firms of all AUM ranges.

Source:    http://www.riainabox.com/download-the-2017-ria-technology-landscape-infographic

Growth of FinTech

The accelerated rate of change is, indeed, a double-edged sword. It brings both threats and opportunities to today’s RIA. Innovative technology is helping the RIA streamline operations, save time and increase all aspects of the advisor-client relationship. Today’s rapid-change environment is also presenting great opportunity to the advisor who is willing to challenge the status-quo and the “way it’s always been done.”

Another example of significant change in the RIA world is the emergence of Alternative Investments. Alternative Investments have presented an unparalleled opportunity for both the advisor and the investor. Once available only institutionally, today’s advisor can now utilize Alternative Investments to deliver attractive returns to clients that are largely uncorrelated to market risk. And by leveraging technology, the RIA can interface with the customer, process paperwork and communicate with much greater speed and efficiency.

In this constantly changing marketplace, differentiating your business is paramount to retaining and attracting new retail investors. At Capstone Alternative Strategies, we are in the business of helping select RIAs create a new vertical in their practice to include a unique Alternative Investment offering with an attractive risk and return profile.

Capstone has created a More Efficient Frontier by unlocking the hidden value in a life insurance asset-backed solution that offers the investor attractive risk-adjusted yield with no exposure to downside capture. To learn more about us and how we can be an engine for growth, contact Jason Bokina at 404-504-7006 or email contact@capaltstrategies.com.