2017 may be a hard act to follow for RIAs, but firms that want to keep growing must continue to focus on client needs, marketing and adding talent, according to the latest RIA Benchmarking Study from Charles Schwab.

For the first time in the 12-year history of the study, average assets per client surpassed $2 million last year for firms with $250 million, while median AUM for RIAs grew 16% from 2016.

Median revenue for independent advisory firms hit $3.6 million last year, reflecting a five-year compound annual growth rate of 10%. Firms with more than $2.5 billion in AUM reached $20 million in median revenue last year.

"The fastest growing firms leveraged marketing strategies and business partner referrals to achieve more client growth," says Jonathan Beatty, senior vice president of sales and relationship management for Schwab Advisor Services.

Developing what Beatty calls "an ideal client persona" and a client value proposition have been key for fast-growing firms, according to the report.

For example, some firms have had success targeting high-net-worth clients who are seeking help with lifestyle management and want to be connected to a community of like-minded individuals.

Top tier firms are increasingly adding personalized services such as charitable planning, family education and tax planning to address clients' specific needs, the report noted.

Fast-growing firms are also using digital marketing strategies including improved websites, email newsletters and social media to attract new clients at higher rates than other firms, according to the report.

In particular, Schwab is seeing a "big uptick" in social media and video usage by RIAs, Beatty said. He urged advisory firms to limit their videos to around two minutes in length, however. "You want to be quick and concise," he said, "Otherwise, it seems like it's too long."

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More than 40% of RIAs said they hired from other independents last year.

The report also cited talent as a cornerstone for RIA growth and success.

In fact, nearly three-quarters of firms are planning to hire personnel in the next 12 months. And the hiring process promises to be a dogfight: 41% of firms surveyed said they hired from other RIAs last year.

Around 80% of firms participating in the study plan to add relationship managers or investment professionals, while 65% plan to hire administrative staff.

"Talent is to an RIA what oxygen is to fire: it feeds growth," Beatty said. "But it's more of a seller's market for talent than ever. We found that firms that have created an employee value proposition are winning the talent war. The best talent is looking for a firm where there is the most opportunity to do the best work."

To attract that level of talent, Beatty says, RIAs must be able to offer state-of-the-art infrastructure and technology, a well-defined decision-making process and "a clear, dedicated path to ownership."


Charles Paikert

Charles Paikert

Charles Paikert is a senior editor at Financial Planning. Follow him on Twitter at @paikert.