RIAs boost profitability while gaining clients, Charles Schwab study shows

Profitability is up 27% since 2011 as firms become more efficient through technology
OCT 26, 2016
Registered investment advisory firms increased profitability last year as they embraced technology and gained clients, according to Charles Schwab & Co. Profitability rose about 4% last year and is up 27% since 2011 as firms become more efficient through technology, according to the firm's RIA benchmarking study. The study was based on 1,128 firms, a majority of which had at least $250 million of assets under management. Operating income margins were 28.2% in 2015, compared with 22.2% five years ago. RIAs are automating the back-office work, freeing up resources to spend more time with clients and gain assets, Jonathan Beatty, senior vice president for sales and relationship management at Schwab Advisor Services, said in an interview. Firms are increasingly using “electronic signatures” while integrating existing technology to reduce redundancy in work flow, he said. Revenue last year rose $3.6 million for the median firm, representing a compound annual growth rate of 10.9% since 2011, the study shows. AUM jumped to $588 million at the median firm, from $365 million in the same five year period, while the average number of clients went up as well. For example, RIAs with more than $2.5 billion of assets had 1,089 clients last year, compared with 792 in 2011. Firms with $250 million to $500 million of assets saw the number of clients increase to 257 from 183 during that period.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.