The Independent Agent and Your Retirement

Independent registered investment advisory firms are coming of age, and they’re coming into money, too, hitting record levels of revenue and profitability as they record 20 years in business.

That’s according to the Charles Schwab 2015 RIA Benchmarking Study, which found that almost half (42 percent) of the firms participating in the study have doubled their revenue since 2009.

In addition, assets under management (AUM) have increased by 75 percent for half of the firms in the study over the same time period, representing a compound annual growth rate (CAGR) of 12.1 percent.

When it comes to profitability, that — when measured as standardized operating margin—has also soared, gaining 36 percent over the last five years and now standing at 27 percent for the median firm in the study.

More good news is that the gap in profitability has lessened between the most and least profitable firms, as the industry continues to mature and more firms adopt best practices and technology-led innovations.

But firms aren’t resting on their laurels: 82 percent of the RIAs in the 2015 study listed as one of their top three priorities achieving growth through the acquisition of new clients.

They’re already doing pretty well at that; over the last five years, the number of new clients has risen 24 percent for half of the study’s participants. Just in 2014, the top-performing firms brought in 10 percent or more new clients, while the median firm gained 5 percent more clients.

And those clients are getting larger: the average account size is now $1.9 million — and among the top-performing firms, it’s more than double that at $3.9 million.

What these firms are getting, they’re keeping; there’s a median year-over-year retention rate of 97 percent. Existing clients are giving these firms a greater share of their money, too, with top-performing firms increasing share of wallet by 4 percent in 2016.


About robertjrussellcompanies

International Real Estate Agent * Insurance Broker * Radio Talk Show Host * Public Speaker * find out about me - visit
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