RIAs’ revenue, AUM hit all-time highs in 2010
Let the good times roll. After several lousy years, revenues and assets under management for RIAs hit an all-time high in 2010. More of the same to come?
Revenue and assets under management reached record highs for independent registered investment advisers in 2010. Profits rebounded as well.
According to a study by The Charles Schwab Corp., the median firm among 820 RIA respondents ended the year with $212 million in assets, up from a previous high of $176 million that was set in 2007.
Median annual revenue, meanwhile, totaled $1.3 million, compared with $1.22 million in 2008, the previous high.
Likewise, median standardized operating income, as a percentage of revenue, rebounded to 18.3%, up from 14.9% in 2009. Thus, the median adviser — the one with $1.3 million in revenue — generated nearly $238,000 in operating income.
Investors increasingly turned to independent investment advisers in the wake of the 2008 market downturn, a trend that is likely to continue, said Bernie Clark, executive vice president and head of Charles Schwab Advisor Services.
The downturn spurred many investors to leave big, more traditional investment firms in search of independent advice, Mr. Clark said.
“STRONG FOUNDATIONS’
“As the RIA industry continues to recover, independent advisers are well-placed to benefit from the strong foundations they built during the downturn, increasing their ability to weather future storms and creating an underpinning of industry growth and momentum for years to come,” Mr. Clark said in a statement.
Investment advisers worked harder for their money last year, and did more with less, according to the survey.
Advisers increased their client count 13%, on average, from their pre-downturn averages, and revenue per client averaged $7,300, up 5.8% from $6,900 in 2009. That’s still 13% below the peak in 2007 of about $8,400.
Staff-related expenses at the average RIA firm were 62% of revenue in 2010, down from 65% the year earlier. Advisers are focused on continuing their growth spurt, with 63% ranking growth as their top strategic goal.
E-mail Lavonne Kuykendall at [email protected].
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