$1B+ Advisors Hopeful About Growth
Advisors with $1 billion or more under management are more optimistic about future growth than their smaller counterparts, according to a new study by Schwab Institutional.
Schwab's 2010 RIA Benchmarking Study found that 94% of the 86 $1 billion-plus advisors surveyed are planning to grow either aggressively or moderately over the next five years.
In the overall study, which looked at 870 advisors with a wider range of assets, 84% of respondents had the same outlook.
The $1 billion-plus group was made up of about 72% wealth managers, 20% money managers, 7% institutional investment consultants and 1% financial planners, according to Schwab.
"I think we're seeing the billion-plus firms being more aspirational because over the past ten years they have been the more aggressive growers," said Janelle Sallenave, who heads Schwab Institutional's family-office services business.
The survey also reflects the fact that larger advisors have put more effort and resources into business planning in recent years, she says.
"Compared to other groups in the study, the billion-plus firms feel much more confident about their marketing strategy and their ability to execute it," Sallenave said.
Although the bad economic times haven't doused the goals of billion-plus advisors, they have impacted the reality of their bottom lines. The percentage of billion-plus advisors dissatisfied with their growth increased to 34% in 2010, from 12% a year earlier.
The median firm in the $1 billion-plus group saw an 11% drop in revenues in 2009, after a 2% increase in 2008 and a 19% increase in 2007. In February and March, they anticipated an average revenue increase of 14% for 2010.
The percentage of advisors in this group concerned about their ability to plan for long-term growth also increased from 10% to 24% over the past year.
Assets under management, however, rose in 2009 after sinking in 2008. The median advisor in the $1 billion-plus group saw a 21% rise in AUM, compared to a 21% drop a year earlier.