Home » Financial Advisor » FA Online » RIAs Say AUM Is Up; Revenue Still Off '07 High

« Previous Article | Next Article »

RIAs Say AUM Is Up; Revenue Still Off '07 High

September 14, 2010 • Jeff Schlegel

The strong rebound from the market lows of March 2009 has produced record-high AUM levels for RIAs, but higher costs means revenue is still lagging, according to the latest Rydex|SGI AdvisorBenchmarking study.

The average advisory firm saw assets under management rise 28% last year, to $174 million from $136 million in 2008. That percentage increase is the highest in the survey's 11-year history.

The survey of 427 RIA firms found 42% expect their AUM to grow another 11% to 20% during the next five years, and that 79% of advisors expect growth to come from referrals from existing clients.

That said, survey respondents said that expenses were slightly more--and revenue slightly less--than peak levels from 2007. Last year's median profit margin of 19% equaled the prior year, but that still trails levels from five years ago.

In addition, the survey found that 31% of advisors cut back on principal compensation in favor of investing that money back into their practice. At the same time, just 8% of advisors trimmed compensation for administrative and support staff.

The chief concerns cited by advisors were finding new clients (79%), too much government regulation (71%) and the need to boost technology spending (68%).

Elsewhere, advisors on average spent 10% of their time on client service last year versus 15% in 2008, and 22% are offering investment management services to other advisors.

The survey was conducted from February through April 2010.

« Previous Article | Next Article »

1 Comment

Login in order to post a comment

Comments

CliffCampeau 13 years ago

Partner

According to a recently released study by the National Federation of Independent Business the biggest challenge facing small businesses today is not government regulation, over taxation or financing availability. So what is it that is holding small businesses back? Well, thirty-one percent of those surveyed indicated that lackluster demand or "poor sales" was the single biggest problem. While as your article points out the landscape is somewhat different within the financial services sector where the challenge for independent firms is on determining how to leverage solid investor demand and differentiate their firms to capture more than their fair share of revenues. While the category is growing, so to is the competition thus increasing the need to focus on how to profitably expand revenues in order to leverage these trends. Traditional referral marketing strategies and reliance on yesterday's media mix may not yield the results that firms are looking for. In a time of [url=http://www.evolutionizemypractice.com/about-us/blog/whats-holding-your-firm-back.html] marketing convergence[/url], integrating new media and technology tools to increase the number of touchpoints between your firm and your client and prospect base is a necessity to drive profitable growth. Where to start? 1) Build or update your website 2) Leverage your investor content 3) Embrace e-mail marketing as part of your contact plan 4) Investigate compliant means of integrating social media marketing into your practice development plans. The combination of cost efficiency and consumer effectiveness associated with digital media when coupled with their ability to expand your firm's reach will certainly have a positive impact on your integrated practice development efforts.