More than one-third of RIAs have doubled their assets under management since 2009, according to a new Charles Schwab study. In “The Power of the Independent Advice Business Model,” Schwab says that in 2013, RIAs showed record growth and had the highest profitability in any year they have measured. (The annual study began in 2006.) For the 2014 benchmarking study, Schwab looked at 1,132 firms with AUM of almost $750 billion.
Other gauges of the improvement in fortunes for RIAs since 2009 include:
• the median standardized operating margin increased 38%;
• revenue per professional rose 37%, with a median of $530,000; and
• for firms that manage more than $1 billion in AUM, revenue per professional increased to a median of more than $637,000.
The study also says that the median firm had compound annual growth since 2010, which spelled a 62% increase in AUM.
Among the reasons for the positive results are:
• creating long-term opportunities and building business through succession planning;
• applying operational disciplines;
• simultaneously maximizing performance against client needs and the firm’s goals;
• having a chief operating officer to actively manage day-to-day operations;
• increasing use of technology and electronic interaction with clients; and
• attracting and retaining top talent and performers.
