Registered investment advisors’ (RIAs) assets under management rose 28% to an average of $174 million in 2009, up from $136 million in 2008, the 2010 Rydex/SGI AdvisorBenchmarking Annual Study shows. This was the biggest percentage increase in the survey’s 11-year history.

Growth in AUM is the No. 1 goal for 53% of the RIAs surveyed, and that group appears optimistic, indeed, for 42% of those surveyed expect their AUM to grow between 11% and 50% over the next five years. For 79%, growth is expected to be driven by referrals.

Nonetheless, that same number, 79%, said that finding new clients is their biggest challenge, followed by government overregulation (71%) and increased investments in technology (68%).

Asked about areas where they felt their could improve, 47% again cited client acquisition. Nearly half also pointed to marketing.

Profit margins remained consistent with 2008 levels of 19% even though revenues were down from 2007 highs and expenses edged higher. Nearly one-third, 31%, said they are coping with these more challenging business conditions by reducing compensation for their principals and instead reinvesting that money in their business. In fact, 18% have added new services, with an eye to building out their businesses.

Nonetheless, RIAs are not cutting back on compensation for support staff; only 8% have reduced administrative compensation, and only 3% have laid off staff. 

“Advisers who have learned to leverage opportunity in a tough and unpredictable economy have managed to continue to grow their businesses successfully,” said Maya Ivanova, research manager for AdvisorBenchmarking. “A significant part of this growth trend can be credited to advisors being prepared to take action when an opportunity presents itself.”

The study also found that RIAs charge average fees of 0.92%, slightly higher than in 2008, and that the majority of their assets, 34%, are in mutual funds. The 2010 Annual AdvisorBenchmarking Study was conducted through online surveys of 427 RIA firms from February through April 2010.