Amid rising wave of breakaway advisors, firms collaborate on research to guide strategic decision-making

CHICAGO: #RIA--F2 Strategy, a leading wealth management technology services company, today released a white paper in collaboration with Dynasty Financial Partners, LLC ("Dynasty"), a provider of technology-enabled wealth management solutions and business services for financial advisory firms. This research, aimed at empowering prospective breakaway advisors and existing registered investment advisors (RIAs) in navigating critical technology and operational decisions, indicates substantial benefits for mid-sized firms partnering with Dynasty.

F2 Strategy and Dynasty collaborated on this study between September and December 2023, with the shared goal of supporting financial advisors as they contemplate independence. This research unlocks valuable insights by benchmarking 38 Dynasty-affiliated RIAs against a wide sample of 4,669 RIA firms registered with the U.S. Securities and Exchange Commission (SEC). It focuses on the implications of technology on firm operations, growth and valuation over a five-year period, examining various technology operational frameworks to aid advisors in a successful transition to independence.

Strategic Alliances and Growth Opportunities

The study reveals compelling benefits for advisors partnering with Dynasty, especially evident for firms with assets under management (AUM) between $300 million and $1.8 billion. These partnerships enable enhanced operational efficiencies and foster aggressive business growth, underscoring the distinct advantage of aligning with Dynasty's robust platform.

One of the most striking findings is the accelerated AUM growth and heightened firm valuation for Dynasty-affiliated firms, outperforming comparable RIAs by a notable margin. This growth, quantified at a 7.91 percent higher compound annual growth rate (CAGR) over five years, demonstrates the tangible benefits of strategic partnerships in the independent advisory space. Furthermore, the data reveals that the average payout increase for independent advisors partnering with Dynasty is 42%, with many advisors expanding their gross income margin by 100% or more.

"At Dynasty, we’re committed to the role we play in guiding financial advisors on their path to independence and to creating wealth through ownership of their own firms. By outsourcing key functions, advisors are able to focus on their clients and grow their business,” said Andrew Marsh, Vice Chairman at Dynasty Financial Partners. “The current momentum toward independence, propelled by regulatory, technological and generational shifts, is marked by a growing adoption of client-first, fiduciary standards. Our collaboration with F2 Strategy is designed to equip advisors with the insights needed for this transition, highlighting the strategic benefits of collaboration with Dynasty while encouraging a thoughtful, nuanced approach to technology and operational planning based on firm size and growth goals.”

Technology as a Driver of Success

Another key takeaway from the research is the critical role of technology in empowering firms. Establishing a technology platform akin to Dynasty's proves cost-prohibitive for smaller firms, denoting a significant barrier to entry. Conversely, the study also points to the pitfalls of lower-cost operating models such as custodial-dependent or all-in-one solutions, which, while financially attractive, may compromise scalability and long-term growth potential.

For larger firms, i.e., those exceeding $2 billion in AUM, the consideration shifts towards the feasibility and challenge of developing proprietary technology solutions versus the benefits of partnering with Dynasty, weighing the pros and cons in light of staffing, cost, and growth potential.

Bryce Carter, Senior Manager at F2 Strategy, added: “Choosing the independent path is a landmark decision for advisors, and it's crucial to navigate this journey with the right partners and operating model. Our goal is to provide a useful roadmap, empowering advisors with data to align technology and operations with their longer-term vision.”

This whitepaper serves as a guide for advisors considering the shift to independence, providing a helpful resource for decision-making around technology investments and operating models. F2 Strategy and Dynasty Financial Partners are committed to supporting financial advisors through this journey, offering insights that pave the way for informed, thoughtful transitions.

For more information and access to the full white paper, visit f2strategy.com.

About F2 Strategy

F2 Strategy is a leading wealth management technology services firm helping complex RIA, wealth, bank/trust and family office firms improve their technical capabilities to build exceptional client and advisor experiences. Led by former executives of a wide range of top-rated wealth firms and family offices, F2 Strategy combines its results-driven management strategy with industry-leading, proprietary research to create customized high-tech solutions. A diverse, creative, and people-centric company, F2 Strategy believes the right technology has the power to support, elevate, and empower us all to reach the highest level of fulfillment. F2 Strategy was founded in 2016 in San Francisco.

About Dynasty Financial Partners, LLC

Dynasty is a provider of technology-enabled wealth management solutions and business services for financial advisory firms primarily focused on serving high net worth and ultra-high net worth clients. Dynasty provides access to a comprehensive platform of software and technology tools, business services and holistic investment management capabilities through an open-architecture platform delivered via a suite of proprietary and third-party technologies. Dynasty’s technology, tools and services provide advisory firms the supported independence to launch their business, scale their operations and grow their firms — both organically and inorganically — while also allowing them to be more focused on and better equipped to serve their clients.

For more than a decade, Dynasty has championed the benefits of independent wealth management for high net worth and ultra-high net worth clients and has contributed to the movement of assets from traditional brokerage channels to the independent channels of wealth management. As Dynasty is becoming a recognized industry leader, Dynasty has differentiated itself by developing competitive strengths, including a deep understanding of and strong relationship with its clients, a comprehensive offering of services and technology-enabled solutions, the ability to leverage its size and breadth to invest, the flexibility and seamlessness enabled by a modular technology solution, the entrepreneurial culture and experienced and committed management team. Dynasty is committed to continually growing its business by facilitating existing advisory firm clients’ growth, onboarding new clients, increasing the clients’ use of its broader capabilities, launching additional solutions and facilitating complementary acquisitions.

Fonte: Business Wire