Practice Management

Advisers: Hefty asset growth in 2013

Dec 16, 2012 @ 12:01 am

By Jeff Benjamin

Financial advisers are predicting a stronger return on assets next year, despite falling short this year, according to the latest research from Russell Investments.

The results of the quarterly survey, released last Thursday, show that advisers expect 2013 to bring an 8.4% growth in ROA: a company's ratio of revenue to assets under management.

The forecast is somewhat surprising, considering that survey respondents, on average, said they expect to see a 7.6% return on assets this year, but only realized 7.2% growth in 2012.

IMPORTANT METRIC

Russell's Financial Professional Outlook survey, which ended the first week of November, includes responses from more than 200 financial advisers from 93 national, regional and independent advisory firms.

“Return on assets is one important metric for goal setting around business growth, alongside other key indicators, such as recurring revenue, total revenue per client, assets under management per client and clients per full-time employee,” said Sam Ushio, practice management consultant at Russell.

“ROA provides valuable insight into the revenue efficiency of the adviser's asset base,” he added.

While ROA growth among fee-based advisers is driven primarily by new clients, increased pricing, performance and moving cash off the sidelines, at the broker-dealer level, growth is coming from a transition away from commissions and toward fee-based advice, Mr. Ushio said.

EVOLUTION

“The survey said the No. 1 strategy was to deepen the relationships with clients,” he said. “Transaction-based advisers weren't always as oriented toward the relationship, but what we're seeing now is the evolution of the average adviser because they're starting to get it.”

Among the advisers surveyed, 62% said they are focusing on deepening client relationships to help increase ROA across their businesses. Mr. Ushio said advisers understand that many wealthy investors diversify by working with more than one adviser, but that by strengthening client relationships, an adviser can encourage clients to consolidate their assets.

jbenjamin@investmentnews.com Twitter: @jeff_benjamin

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

How to redesign, rebrand and recast your practice

Redesigning and reshaping your practice is a tough pill to swallow for advisers. But what got you here won't get you there, says John Kozuch, a Chicago financial adviser.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

Morgan Stanley sees slower fee-based asset flows on fiduciary rule delay

Flows to advisory accounts, while still higher than the start of 2016, dropped off more than 20% from Q2 and were the lowest in a year.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

How to save retirement planning from tax reform

Losing big deductions, even in lieu of a larger standard deduction, may cause taxes to rise in retirement.

Advice firms in a tricky financial position

As revenue growth dips and salaries rise, nearly 90% of firms are at or near capacity.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print