Insights on how advisors drive long-term growth

Findings from the 2020 RIA Benchmarking Study from Charles Schwab reaffirm essential pathways to success. Discover some of the key insights using the tabs below.

The changing business environment in 2020 has reaffirmed the importance of strategic planning, operational excellence, client experience, communicating value, and talent development as firms reassess their daily work and interactions. These same areas form the pillars of the Schwab Advisor Services™ Guiding Principles for Advisory Firm Success, a foundational framework that helps Registered Investment Advisors (RIAs) meet the challenges of growing their firms and continuing to thrive across changing market conditions.

All five guiding principles also resonate in the results of the 2020 RIA Benchmarking Study from Charles Schwab. Explore this data-rich site to see how advisors of all sizes position their businesses for long-term success. The study represents over 1,000 advisory firms, with more than three-quarters of firms completing the study after March 1, 2020, when markets had already been heavily impacted by the global pandemic.

Insights from Schwab's Benchmarking Study are incredibly valuable in helping us see whether our firm is positioned competitively. We use those insights to pressure-test our strategy.

Catharine Aguilar, Chief Marketing Officer, CornerCap Wealth Advisors

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Compass
GUIDING PRINCIPLE

Effective planning and execution is a leading indicator of success

Strategic planning, effective execution, and a growth mindset have helped RIA firms thrive for decades. Through creating or revisiting a strategic plan, firms sharpen focus and alignment around their long-range vision for future growth while also staying ready to pivot when necessary. Results from the 2020 RIA Benchmarking Study in the chart below show continuing growth in revenue, total clients, and assets under management (AUM).1

RIA 5-year growth measures

RIA 5-year growth measures

Revenue

Clients

AUM

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GUIDING PRINCIPLE

Value is defined through your clients' eyes

RIAs benefit from developing an offer based on the needs and desires of the clients they most aspire to serve. Firms that create a written ideal client persona (ICP) and client value proposition (CVP) attract more new clients and new client assets than firms without these documents. On average, these RIAs attracted 28% more new clients—representing 45% more assets.2 The data below shows how firms are embracing ICPs and CVPs, what services they are offering, and how often they include certain offers in their asset management fees.3

Evolution of services in the RIA offer

Firms with written ideal client persona (ICP) and/or client value proposition (CVP)

Service offerings by firm size

Service offerings by firm size

Service offerings by firm size

Firms under $250M

Firms over $250M

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GUIDING PRINCIPLE

Operational excellence creates greater capacity for clients

During this time of social distancing, technology has supported advisors in enhancing their operations and staying connected with clients. The chart below illustrates how Top Performing Firms are modernizing their client interactions versus all other firms. Top Performing Firms, a new feature in the Benchmarking Study, demonstrate strong performance across a broad spectrum of metrics in key business areas.4

Digital touchpoints implemented by firms

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GUIDING PRINCIPLE

Your reputation is your brand

Feedback from existing clients is critical in helping firms amplify their value and attract new clients. Successful firms seek to understand how clients perceive their value and services so that they can more clearly project those qualities. The 2020 study results reveal that Top Performing Firms are leveraging many channels to drive superior growth—including business partner referrals and marketing in addition to client referrals. The charts below illustrate how all peer groups are driving growth.

Strategies to drive growth

Strategies to drive growth

Sources of new client asset growth in 2019

Client feedback channels used by firms

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GUIDING PRINCIPLE

People are your most important asset

Amid dramatic changes to the work environment and economic turmoil spurred by a global pandemic, supporting employees—not only professionally but also personally—has never been more vital. Training and education can help increase employee engagement and connectedness. In addition, staff attrition metrics can help provide insights into firms' effectiveness in hiring, onboarding, and engaging employees. The chart below shows the percentage of firms that experienced staff attrition and the number of employees who left firms.

Firms experiencing staff attrition

Participate in 2021

Participate in 2021

Understanding the best practices of other successful firms can help you more confidently make strategic decisions that delight clients and drive long-term growth. Gain those insights and many more in the RIA Benchmarking Study from Charles Schwab—the largest of its kind that focuses on independent RIAs. Our 2020 study compiled data from 1,010 advisory firms representing $1.1 trillion in assets under management. Participating RIAs can compare hundreds of performance metrics across their peer group to track progress against strategic goals and identify opportunities for growth.

Contact Schwab Advisor Services or visit our resource page to learn more about taking part in the 2021 RIA Benchmarking Study.

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About the 2020 RIA Benchmarking Study from Charles Schwab

Schwab designed the RIA Benchmarking Study to capture insights in the RIA industry that are based on study responses from individual firms. The 2020 study provides information on such topics as assets and revenue growth, sources of new clients, products and pricing, staffing, compensation, marketing, technology, and financial performance. Fielded from January to early April 2020, the study contains self-reported data from 1,010 firms that custody their assets with Schwab Advisor Services and represent $1.1 trillion in assets under management (AUM), making this the leading study in the RIA industry. This self-reported information provided by individual advisory firms was not independently verified. Participant firms represent various sizes and business models. They are categorized into 12 peer groups—7 wealth manager groups and 5 money manager groups—by AUM.

The Firm Performance Index evaluates firms in the study according to 15 metrics that align with the Guiding Principles for Advisory Firm Success, to arrive at a holistic assessment of each firm's performance across key business areas. It provides comprehensive comparisons for all firms participating in the study, not just within a peer group. The metrics in the Firm Performance Index measure growth in clients, assets and revenue; client attrition; staff attrition; operating margin; time spent on client service; time spent on operations; standardized workflows; written strategic plan and succession plan; and ideal client persona and client value proposition. The Firm Performance Index is calculated among all firms in the study without regard to assets under management or firm type. Firms that rank in the top 20% of the index are included in the Top Performing Firms.

Data represents median results by peer group (based on AUM) unless otherwise noted. Past performance is not an indicator of future results.

1. Median results and compound annual growth rates (CAGR) over the 5-year period from 2015 to 2019 by peer group (based on AUM). Results do not include those firms that experienced a merger or added a new partner during this time period.

2. Median results for all firms with $250 million or more in AUM.

3. Results from the 2016 and 2020 RIA Benchmarking Studies from Charles Schwab.

4. Top Performing Firms are those that rank in the top 20% of the Firm Performance Index. The index evaluates all firms in the study according to 15 metrics to arrive at a holistic assessment of each firm's performance across key business areas.