RIAs Increased Average AUM Significantly

A survey conducted by Rydex|SGI's AdvisorBenchmarking of 427 registered investment adviser (RIA) firms found their average assets under management (AUM) increased by 28% from 2008 to 2009.  

The firms, on average, increased assets from $136 million in 2008 to $174 million in 2009–the greatest increase AdvisorBenchmarking has seen in the 11 years that it has been conducting this survey.  

Perhaps the reason for this dramatic increase is that more than half of RIAs have made it their primary goal to grow their AUM.   The trend may continue, as 42% expect the number to grow another 11-20% in the next five years.   

However, the survey did not conclude that RIAs are earning more revenue as a result of increased business.  The survey found that because expenses have increased, profit margins have largely stayed the same since 2008.  Thirty-one percent of advisers also decided to decrease their compensation and instead, chose to invest more into their business.  

“A significant part of this growth trend can be credited to advisers being prepared to take action when an opportunity presents itself,” said Maya Ivanova, research manager for AdvisorBenchmarking. “Advisers who have learned to leverage opportunity in a tough and unpredictable economy have managed to continue to grow their businesses successfully. 

As AUMs continue to grow, financial advisers are still challenged by several factors, according to the survey.  The most common ones include finding new clients (79%), government overregulation (71%), and increased investments in technology  (68%).