Harriet Davies
Editor - Family Wealth Report
18 July 2012
Daily News Analysis
Independent registered investment advisors had a record year in 2011, in terms of both assets and revenues, and are now setting their sights on strategic planning and execution, according to Charles Schwab’s latest benchmarking study of the sector.
Despite the flat market performance last year new clients boosted assets under management at RIAs, with the median firm’s client assets rising by 3.8 per cent.
The median firm increased its revenue by 12 per cent, marking the second consecutive year of record highs for the industry.
It should be noted that measuring everything at the median, with no mean, can cause outlying firms to dominate results. The study covered over 1,000 firms, managing more than $425 billion in combined assets, with 105 firms managing at least $1 billion.
In terms of “new clients through the door,” the median firm grew its client base by 8.2 per cent, but taking client departures into account client growth registered at 4.7 per cent, Charles Schwab said. This was flat from 2010 and up from 3.5 per cent in 2009.
Meanwhile, the top 20 per cent of firms who were managing to add the most clients expanded their client base by 14.7 per cent or more (not including departures).
Jon Beatty, senior vice president, sales and relationship management at Schwab Advisor Services, said RIAs had “stayed true to their core mission” of client service, and had achieved growth through this.
