The independent advisory industry remains on a solid growth trajectory, according to the 2018 RIA Benchmarking Study from Charles Schwab.
Independent registered investment advisers (RIAs) saw their assets under management (AUM) grow by a median of 16.2% in 2017, up from 9.6% in 2016. Their five-year compound annual growth rate for AUM was 10.9%, from $358 million in 2013 to $652 million at the end of last year.
“Independent advisers have certainly enjoyed buoyant investment returns but have also grown their businesses organically and strategically, which positions them well for sustainable growth even in the face of market volatility,” says Jonathan Beatty, senior vice president, sales and relationship management at Schwab Advisor Services. “Firms are fueling their organic growth by differentiating and marketing their value propositions, improving the client experience and strategically expanding their service offerings to meet the needs of their ideal clients.”
Schwab says these findings reinforce its previous report, “Guiding Principles for Advisory Firm Success.” Enhancing strategic planning and execution is among the top five strategic priorities, following new client acquisition and improving productivity with technology.
Fifty-one percent of firms have documented both an ideal client persona and a client value proposition; firms that have done so win 26% more clients and 41% more client assets.
Eighty percent of firms offered charitable planning services in 2017, up from 63% in 2013. Seventy-two percent offered family education services last year, up from 56% in 2013. Other services being offered include: tax planning (76%), lifestyle management (33%), bank deposits (32%), life insurance products (31%) and annuities (31%).
Last year, 46% of firms had a documented marketing plan and 49% had a dedicated marketing budget. Thirty-three percent document their referral goals. Firms also commonly use email newsletters (62%), social media (58%) and videos (22%).
The median firm increased its client base by 4.8% last year, up from 3.6% the year before. Seventy-three percent of firms are planning to hire in the next 12 months, and 41% recruited from other RIA firms in 2017. Eighty percent intend to add relationship managers or investment professionals, and 65% are looking to bring on administrative staff.