A challenging year became a catalyst for growth, as firms adapted quickly to new business practices by using a variety of innovative strategies to support staff, engage clients and drive results, according to Charles Schwab’s 2021 RIA Benchmarking Study.
Median assets under management were up 14.5%, revenues were up 7.5%, and the number of clients were up 4.7% for all firms, the firm reports. What’s more, asset growth rates were higher than the five-year compound annual growth rates over the period 2016 through 2020 for all peer groups.
Additionally, 68% of all advisors met or exceeded their client growth goals, while the top performing firms did even better, with 81% exceeding or meeting their new client goals, the study notes. “2020 created an atmosphere of innovation that helped advisors reimagine how they engage with clients, prospects, and staff. These experiences will help advisors thrive as the RIA industry continues to grow,” stated Lisa Salvi, Schwab’s Managing Director for Business Consulting & Education.
Fielded from January and March 2021, the study contains self-reported data from 1,340 advisory firms that custody their assets with Schwab Advisor Services or TD Ameritrade, representing over $1.5 trillion in AUM.
New Strategies and Propositions
Firms with written marketing plans, ideal client personas and client value propositions attracted more new clients (50%) and client assets (62%) in 2020.
Not surprisingly, the study notes that technology was essential for client connections and operations during the pandemic. Those technology systems that were reported as having the greatest impact on return on investment in 2020 were portfolio management systems, client relationship management systems and financial planning systems.
Firms also pivoted to virtual business development and tried new tactics to maintain their level of new client assets in 2020. Over a third of all firms implemented webcasts/webinars, virtual events with clients inviting friends, and virtual events with prospects only for the first time in 2020, Schwab notes.
And RIAs apparently had success with digital business development. More than 70% of firms generated leads from their websites, virtual prospect events and online advertising. Among the top platforms that firms had success with were website (80%), email campaigns (68%), webcasts/webinars (67%), online advertising (72%) and virtual events with prospects only (75%). The study also found that nearly 80% of firms converted some prospects completely virtually in 2020.
Looking ahead, advisors anticipate leveraging both virtual and in-person business development strategies.
Website Optimization
With websites serving as the new “front door” during the pandemic, the study found that the top features that were implemented by the top performing firms for lead generation included:
- search engine optimization (52%)
- content designed for ideal client persona (51%);
- website metrics and analytics (51%);
- lead capture form (49%);
- blog (47%);
- social media buttons (46%); and
- video (42%).
Recruiting
Advisors also continue to prioritize recruiting new staff. According to the findings, recruiting staff to “increase firm’s skill set/capacity” jumped from the No. 5 spot in priority in 2020 to the No. 2 spot in 2021, second only to acquiring new clients through client referrals, which held the No. 1 spot for both years.
Schwab notes that having an employee value proposition is critical, as a majority of firms hired in 2020, and 78% are looking to add staff this year. To that end, the study found that providing career paths helps support staff development and can increase satisfaction and build “bench strength.”
Investments in staff can also help team members feel connected and appreciated—especially important during uncertain times. Here, the study found that the median spend per professional staff on training, education and professional dues for firms under $250 million was $1,250, while for firms over $250 million it was $1,717.
