RIAs are growing larger as they attract a wealthier clientele, according to a study by Charles Schwab.
“The independent advisors who participated in our study are clearly thriving and growing across all of the key business indicators that we can imagine,” says Jon Beatty, senior vice president of sales and relationship management at Schwab Advisor Services.
The median AUM for a firm on the Schwab Advisor Services platform grew to $593 million in 2016 from $358 million in 2012, according to the latest RIA Benchmarking Study from Schwab. Firms of all sizes have enjoyed a median 10 percent compound annual growth rate in AUM over the past five years, the study said.
The growth in AUM coincides with a 5.2 percent compound annual growth rate in median client relationships over the past five years, from an average of 266 clients in 2012 to 357 clients in 2016. Similarly, RIAs grew median revenue from $2.3 million in 2012 to $3.5 million in 2016, the study said.
Independent firms continue to pick up assets from high-net-worth investors, with the average client relationship increasing in size from $1.6 million in 2015 to $1.8 million in 2016, according to Schwab.
“High-net-worth investors with complex financial needs are seeing the value in what independent advisors are bringing forward,” says Beatty. “I’ve been in this business for 20 years and each year we’ve seen this steady, regular move towards the wealthier investor. It’s because the fiduciary model really works best with clients that have a lot of complexity.”