Charles Schwab has released their annual RIA Benchmarking Study and have noted a number of positive trends across the RIA sector. Despite all the volatility and uncertainty, it seems financial advisors have found themselves in a good place.
According to the study, “RIA firms entered 2020 from a position of strength: robust five-year growth trends across assets under management (AUM), revenue, and clients.” In fact, over that period, all sizes of firms saw AUM growth. And it was just AUM growth, revenue growth has also been strong across the sector.
That might be because of consistency as, “Top strategic priorities have remained consistent year-over- year: acquiring new clients, leveraging technology to improve productivity, and enhancing strategic planning.” There has been a “continued focus on net organic growth,” which “has helped RIAs smooth the impact of volatile markets.”
Making things even better, “Most firms are planning to hire in the next 12 months and are largely targeting talent at other RIAs,” according to the survey.
But this is obviously no time for advisors to rest on their laurels and Schwab made sure to outline “Guiding Principles” for continued advisor firm success:
Effective planning and execution is a leading indicator of success
“Growing your firm requires focus, strategic planning, and an innovative mindset. Establishing a shared vision for the future, creating alignment, and driving effective execution power your growth engine and provide a clear understanding of the future and how you’ll get there.”
Value is defined through your clients' eyes.
“Firms thrive when focusing on the client experience from the clients’ point of view. When every person, process, service, and system maintains an extreme focus on your ideal client, you are able to better differentiate your rm in an increasingly competitive landscape.”
Operational excellence creates greater capacity for clients.
“Institutionalizing your business through technology and operations provides operational discipline allowing you to maximize scalability, manage risk, and build a solid infrastructure so that you can reinvest time where it matters most—with your clients protecting the trust that you have built.”
Your reputation is your brand.
“Every aspect of your rm—employees, centers of in uence, clients, and even your digital presence—should effectively amplify your firm’s reputation within the community you serve, in a way that increases referrals and generates new business.”
People are your most important asset.
“Creating a cycle of opportunity to attract and retain top talent helps ensure continuity of your rm’s people, culture, and values as you prepare for the future. That’s why having a high-performing and diverse team, unlocking their potential, and rewarding and developing the next generation of leadership is a long-term commitment and critical to building a legacy.”
