All Articles Finance How RIAs can take advantage of industry disruption


How RIAs can take advantage of industry disruption

RIAs can take advantage of disruption to strengthen their businesses

6 min read


SB ad december

Oak Street Funding

This post is sponsored by Oak Street Funding®.


Rick Dennen

While the digital revolution is disrupting many industries, many in the registered investment advisor (RIA) space have been challenged to keep up with the pace of change and shifting consumer demands. Baby boomers are set to transfer nearly $30 trillion in assets to their heirs over the next 30 to 40 years, meaning the relationships established today could have significant implications for the future of the business.

In this interview, Rick Dennen, who is founder, president and chief executive officer of Oak Street Funding, discusses the state of the industry and how RIAs can take advantage of shifting industry trends to best position themselves for future gains.


What is disruption and how is it changing the RIA space?

Disruption occurs when an external factor or factors originating in the market influence a firm. As both professionals and consumers, we’ve all noticed a dramatic shift over the last few years in how people seek information and make decisions about their money. How RIAs choose to market their firms, communicate with their prospects and clients, and generally adapt to this digital era will determine the future success of their firms.

RIAs may feel the disruption financially and strategically in areas such as information technology, human resources and marketing. And, when looking at the bigger picture, we also see robust merger and acquisition (M&A) activity causing disruption throughout the RIA space and bringing challenges. But keep in mind that disruption isn’t just about challenges – it also brings opportunities to embrace change and can be an advantage. I believe that the greater the disruption, the greater the opportunity.


What are some of the biggest changes in technology?

Technology has really become a game changer in many industries, but the availability of sophisticated software is a double-edged sword. On one hand, it delivers more information and the benefit of increased capacity for analytics, collaboration and scalability. On the other hand, in a world where more and more data is collected digitally, the risk of privacy violations increases exponentially.

There are so many threats to be aware of, such as ransomware that can hold systems hostage by bringing operations to a standstill, or hackers accessing a system to steal data without anyone’s knowledge. Protecting a firm and its clients’ personal data with internet security must be a priority for any business owner.


How will disruption cause changes to staffing for firms?

With technology taking on more of the lower-level office tasks and duties, the staffing structure of a firm is likely to evolve. I expect to see a greater investment on what’s currently seen as mid-level manager and professional roles. The emphasis on technology could also create a need for IT-focused employees who can develop, manage and leverage technology resources for the firm to harness the data they now have, better serve clients and support the firm’s professionals.

Hiring someone with a background in digital marketing is a great way to bring in fresh, new talent that is well-versed in all things digital. I suggest selecting someone with not only the ability to maneuver through the digital landscape, but also able to help your current staff adapt to and employ digital best practices. And while each business may not need a full-time IT person, there is still a need for a reliable source to help bring the business up to speed, and be available for issues and upgrades down the road.

As with all things HR, it is incredibly important to maintain open lines of communications as roles and responsibilities evolve. Positioning these changes as opportunities with clear communications will help with both staff retention and buy-in, as well as continuity moving forward. That said, without a good culture to retain employees, the benefits of a technology-based approach will be limited.


How will these disruptions alter the way RIAs communicate with clients?

It is extremely important to evaluate current marketing activities and strategies. In the increasingly competitive market, how a firm is promoted will become even more critical. In today’s business environment, marketing must go beyond a static website and direct mail. Getting the word out in the most effective ways is likely to require additional investments in multiple marketing channels.

There are many ways to communicate with clients now, and each RIA firm can determine which channels are best suited for their clients. We have to ask ourselves: Does our website provide enough information or is it too much? Do our customers prefer face-to-face meetings, calls, online chats or texts? Will social media connect with our clients in a personal way? Do they want to read email or watch videos? Do they prefer an online portal, or should we continue to stamp and mail letters? Do we need a different marketing plan for each generation? The volume of possibilities means we need to understand what our customers want, at what time and on what device.

But we all must be careful. Opening more channels of communication requires responding through those channels as well. Only engage in channels you can confidently monitor and support. Otherwise, your clients will be talking and no one will be listening, which will have a detrimental impact on your relationships.


What should clients expect to see in their interactions with RIAs in the coming year?

The flurry of activity around M&A in the RIA space is greatly changing the industry. The disruption of M&A activity is not just that you won this acquisition at the best price, but that you did so in a way that resulted in retaining clients and key employees. We are also seeing the impact on clients from RIAs breaking away from the big wire houses. In either instance, I believe the greatest disruption comes from not having a plan that has measured milestones and goals.

Without a plan, I’ve seen business owners struggle with the effects of unplanned disruptions, including an ill-defined company identity, lack of overall vision, not fully integrating staff, loss of talent, poor morale, ill-defined roles of retiring shareholders and not empowering the next generation. All of these factors, when not addressed prior to an acquisition, can affect client retention. Having a strategy can help prepare for and reduce these disruptions, resulting in a seamless and low-impact transition.


Rick Dennen has a strong record of starting and managing large businesses. Dennen led Oak Street Funding from a business concept in 2003 to a top lender that has originated more than $500 million in business loans. Before founding Oak Street Funding, Dennen was a partner of a venture capital firm, while serving as the CFO and board member for one of the fund’s investment companies. 


Oak Street Funding is an expert in specialty financing. Oak Street Funding partners with insurance businesses, registered investment advisors (RIAs), certified public accountants (CPAs) and restaurant franchisees under the First Franchise Capital brand, as well as third-party servicing for commercial, specialty financing portfolios. Since 2003, we have been successful nationwide in fulfilling the unique capital needs for these cash flow-based industries while providing extraordinary service to our borrowers.