October 09, 2024
Emerging managers often face the challenge of growing their businesses on limited budgets, and Dakota’s Emerging Manager Growth Show is designed specifically to help. Hosted by Dakota’s CEO and Founder, Gui Costin, the show offers practical advice on how managers can do more with less. Each episode focuses on a different institutional channel such as RIAs, pension funds, family offices, banks and broker-dealers or consultants, and provides actionable tips on scaling, best practices, and navigating industry trends. The goal is to equip emerging managers with the tools needed to thrive in a competitive landscape.
This past September, the Emerging Manager Growth Show focused on the RIA Channel with Gui Costin and Tim Dolan sharing their insights on why the RIA space is ideal for emerging managers. They offer strategies for successful outreach, including the importance of consistency, leveraging webinars, and capitalizing on RIAs of all sizes.
In this article, we will cover the key takeaways from September's Emerging Manager Growth Show. By the end of this, you’ll have actionable tips to help you navigate the RIA space and grow your business.
The RIA space presents a significant opportunity for emerging managers. RIAs are always looking for unique investment strategies to differentiate their portfolios, attract clients, and retain their current client base. Unlike institutional investors, which often require a long track record and substantial assets under management, RIAs tend to be more open to working with newer and smaller managers. This makes the RIA space an attractive market for emerging managers looking to make their mark.
A key advantage of RIAs is their discretionary authority, which allows them to allocate capital quickly and efficiently. RIAs often don’t need approval from large committees, which means they can act faster than institutional investors. They can also invest in managers who may not meet the track record or asset thresholds typically required by other channels. This flexibility is a game-changer for emerging managers who are in the early stages of growth.
Success in the RIA space requires consistency and discipline. Emerging managers should adopt a structured approach to outreach, such as city scheduling, where they target five cities at a time and book multiple meetings throughout the day. It’s essential to send simple, direct emails and maintain a consistent outreach schedule. This disciplined approach helps managers build relationships over time, even when initial responses are slow.
Smaller RIAs can be just as valuable as their larger counterparts, especially given the high level of mergers and acquisitions in the RIA space. Many smaller RIAs are being acquired by larger firms, and building relationships with them early on can lead to much larger opportunities down the line. If a small RIA that you work with is acquired by a larger firm, you could suddenly have a relationship with a much bigger player in the industry.
Quarterly webinars are one of the most efficient ways for emerging managers to stay connected with clients and prospects. Webinars provide a platform to share performance updates, discuss the outlook for upcoming quarters, and demonstrate the manager’s investment strategy. For emerging managers, who may not yet have the brand recognition of larger firms, webinars are a free and effective way to build awareness and engagement.
Hosting or co-hosting networking events, such as luncheons or cocktail parties, is an excellent way to connect with RIAs in a more personal setting. These events help build relationships face-to-face, which can be invaluable when you’re trying to stand out in a crowded market. Even if turnout is small initially, consistency is key. Hosting regular events will eventually create buzz and increase attendance, making your firm the go-to for local industry gatherings.
At the end of every meeting, it’s crucial to ask two key questions to assess where you stand with the RIA:
“Do you see this strategy fitting within your asset allocation mix?”
“Do you anticipate doing a search in the next 12 months in this asset class?”
These questions provide immediate clarity on whether there is a real opportunity. If the answers are positive, you can dive deeper into the timeline and specifics. This saves time and avoids unnecessary follow-up when there’s no immediate fit.
Emerging managers often have to make the most of limited resources, and efficiency tools like city scheduling and quarterly webinars are essential for maximizing reach. These strategies help managers maintain regular contact with RIAs without requiring a large marketing budget. When applied consistently, these tools can yield significant results and build strong relationships over time.
Despite market challenges, there is "money in motion" across all channels, including RIAs. Private equity and private credit strategies are especially topical right now. Emerging managers should take advantage of this momentum by staying proactive with outreach, engaging RIAs, and consistently presenting new ideas to potential investors.
A comprehensive database, like Dakota Marketplace, is a valuable resource for emerging managers targeting the RIA space. With detailed information on over 14,000 RIAs, managers can focus their outreach on specific segments based on size, broker-dealer affiliation, or custodial platforms. Having access to this kind of data allows for more targeted and effective engagement, which can accelerate success in the RIA market.
In conclusion, the RIA space presents a significant opportunity for emerging managers to build and grow their businesses. By focusing on consistent outreach, leveraging efficient tools like city scheduling and quarterly webinars, and cultivating relationships with both small and large RIAs, managers can successfully navigate this space.
The advice shared in September's Emerging Manager Growth Show emphasizes the importance of persistence and strategic targeting, providing a clear roadmap for managers looking to raise capital and expand their reach. With the right approach, RIAs can be a catalyst for long-term growth.
To explore all the RIAs within Dakota Marketplace, book a demo.
Morgan Holycross is a Marketing Manager at Dakota.
