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

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.

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