Median RIA firm had 25% operating margins in 2016: Schwab

The median RIA firm grew at a 10% compound annual growth rate over last five years, according to the firm's annual study

Jul 14, 2017 @ 1:49 pm

By InvestmentNews

+ Zoom

The median registered investment advisory firm had operating margins of 25% in 2016 and assets under management of $593 million, according to the latest RIA Benchmarking Study from Charles Schwab.

Median firm AUM has increased at a 10% five-year compound annual growth rate from $358 million in 2012, Schwab said in a release about the survey.

(More: RIAs tout their fiduciary status to clients as DOL rule implementation begins)

At firms of all sizes, the study found that client acquisition via referrals is a top strategic priority. At the fastest-growing firms, it found that existing client referrals and referrals from so-called centers of influence drove 5.8% of new asset growth; at all other firms, referrals collectively drove 2.7% of new asset growth.

Additional marketing activities such as networking, community involvement, website presence, seminars and events helped drive an additional 3.6% of new asset growth at the fastest-growing firms, Schwab said.

It found that the fastest-growing firms had a median of 31 new clients in 2016, more than 1.5 times as many as all other firms. They also had a median of $45 million in AUM from new clients, compared with $23 million at all other firms.

(More: RIAs must confront the emotional side of letting go of their business)

The survey also found that, at the median, average client relationship size grew to $1.8 million in 2016, up from $1.6 million in 2015. Firms with over $2.5 billion in AUM had an average client size of more than $3 million, while firms with $100 million to $250 million in AUM had an average relationship size of $1 million.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Vanguard's Joe Davis: Prepare for lower expected returns

The next five years will be more challenging for the markets than the past five, according to Joe Davis, global chief economist at Vanguard. Here's why it's more important than ever to stay reasonable with return expectations and stick to the plan.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry

After a decade of litigation, fees are lower and retirement plans are more transparent. But have the lawsuits gone too far?

10 best financial adviser jokes

How many financial advisers does it take to screw in a lightbulb?

Hackers may have profited from SEC breach

The hack of the agency's Edgar filing system occurred in 2016, but the regulator didn't conclude until last month that the cybercriminals may have used their bounty to make illicit trades.

Top 10 financial firms ranked by investor satisfaction

Find out which firm took the top slot for overall investor satisfaction for the second year in a row.

What not to say to clients when the markets drop

Here's what advisers should steer clear of saying the next time stocks turn downward.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print