Focusing on fundamentals
Focusing on fundamentals

Focusing on fundamentals helps advisors succeed

Results from the 2019 RIA Benchmarking Study from Charles Schwab show continued long-term growth for RIA firms.

Advisory firms strengthen their ability to thrive across changing market conditions by concentrating on business fundamentals like strategic planning, client experience, operational excellence, communicating value, and talent development. These key business areas form the pillars of the Schwab Advisor Services™ Guiding Principles for Advisory Firm Success, a foundational framework that helps registered investment advisors (RIAs) address the complexities of growing their firms and creating enduring enterprises.

 

Findings from the 2019 RIA Benchmarking Study from Charles Schwab reinforce the importance of these business fundamentals. In this data-rich site, you’ll find key insights into how advisors are evolving their businesses to ensure long-term success—by offering more services, increasing operational efficiency, and building paths to ownership for employees.

Schwab’s Benchmarking Study confirms the steps we’ve taken to improve the health and strength of our business, and helps us identify areas where we should devote more attention and resources.

Jim Berliner, President, Westmount Asset Management

 

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. For most firms, growth is a top priority each year. Through planning, firms set a vision for future growth and create alignment around that vision, helping to drive success. In the chart below, explore the 2019 RIA Benchmarking Study results showing strong long-term growth in assets under management (AUM), revenue, and client numbers despite volatile markets.1

 

RIA 5-year growth measures

RIA 5-year growth measures

AUM

Revenue

Clients

 

Trophy
GUIDING PRINCIPLE

Value is defined through your clients’ eyes

Offering services that provide value from the client’s point of view helps firms attract and retain business. This is why identifying an ideal client and addressing that client’s wants and needs helps firms succeed. Benchmarking Study results show that firms are expanding their service offer to help enrich and strengthen client relationships. Explore the data below to see how firms are expanding their services and how often they’re included in firms’ asset management fees.2

 

Evolution of services in the RIA offer

 

Gears
GUIDING PRINCIPLE

Operational excellence creates greater capacity for clients

Adopting technology and streamlining operations promotes efficiency, freeing advisors up to spend time where it matters most—with clients. As you'll see by exploring the chart below, study results show that firms are integrating more data sources and systems into their CRM, using more standardized workflows within their CRM, and seeing productivity benefits: increased clients per professional and decreased time needed for operations and administration. What’s more, firms have maintained the time spent with each client, helping to enhance the client experience and deepen relationships.2

 

Operational enhancements and increased productivity

 

Megaphone
GUIDING PRINCIPLE

Your reputation is your brand

Successful firms amplify their value and attract new clients by leveraging every aspect of their firm, including employees, centers of influence (COI), and clients. Their messaging is consistent and highlights the value they offer. The 2019 study results below reveal that fastest-growing firms3 are indeed leveraging many channels to drive superior growth—including business partner referrals and marketing in addition to client referrals.

 

Sources of new client asset growth in 2018

 

People
GUIDING PRINCIPLE

People are your most important asset

Opportunities for professional growth and firm ownership help attract and retain top talent, promoting continuity of the firm's people, culture, and values. Firms are increasingly separating the concept of sharing equity and future firm leadership. For many firms, sharing equity with non-founders is more about retaining talent and ensuring an ownership mindset. To make it easier for staff to buy in, options for financing have expanded recently, with firms using banks, internal financing, outside investors, and more. Explore the 2019 study results to see the percentage of firms offering equity and how it’s offered.

 

Firms offering equity to non-founders and financing options

Firms offering equity to non-founders and financing options

Firms offering equity by firm size

Equity financing options by firm size

Participate in 2020

Participate in 2020

Leading your firm to greater success amid increasing competition takes insights and data to help you make strategic decisions with confidence. The RIA Benchmarking Study from Charles Schwab is the largest of its kind focused on independent RIAs, with the 2019 study including data from 1,310 RIA firms with $1.1 trillion in assets. Participating firms can compare hundreds of performance measures across their peer group to track progress against strategic goals and glean powerful insights to identify opportunities for growth.

Contact Schwab Advisor Services about taking part in the 2020 RIA Benchmarking Study or visit our resource page.

(0719-9339) (0719-938Z)

About the 2019 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 2019 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 March 2019, the study contains self-reported data from 1,310 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.

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 2014 to 2018 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. Results from the 2015 and 2019 RIA Benchmarking Studies from Charles Schwab. Results for all firms with $250 million or more in AUM.

3. Fastest-growing firms are the top 20% of firms with $250 million or more in AUM based on 5-year net organic compound annual growth rate. Net organic growth is the change in assets from existing clients, new clients, and assets lost to client attrition before investment performance is taken into account, and it excludes the growth from acquisitions, divestitures, and advisors joining or leaving a firm with assets.