Business was good for registered investment advisors in 2006. Assets jumped 15%, profits leaped 13%, revenues grew 18%, and the number of clients increased by 7%, according to a survey of 913 advisory firms by Rydex AdvisorBenchmarking. But the picture isn't completely rosy, as profit margins slid for the first time in five years. For advisors, that's perhaps a signal to examine their businesses and identify ways to do more with existing resources.

   Maya Ivanova, research manager for Rydex AdvisorBenchmarking, Inc., noted that according to the survey very few advisors target or focus their businesses on any specific client characteristic beyond a wealth range, which ranked as the most important criteria for 65% of advisors. "Most industry pundits agree that advisors should have a more focused target market for their practices so their time is more effectively spent," she said. "Similar clients will have similar needs, and advisors who understand and have expertise with those needs will have an advantage over advisors who are trying to be all things to all people."

   Ivanova also said that advisors are smarter about utilizing one of their best resources-their staff. Faced with time and resource constraints, advisors are increasingly turning to staff to help with client relationships and client meetings. Advisors are also investing in their staff not so much with increased compensation, but through training and professional development. This includes creating more mentoring environments for their employees via paying for seminars, CE courses and licenses.

   The survey found that 71% of advisors raised their AUM fees, but that for the first time in several years profit margins retreated due to a 20% increase in expenses.

   In addition, advisors feel well equipped to handle the investment needs of retirees but feel ill equipped on noninvestment issues, such as health care and housing needs.

   Other findings: nearly 75% of advisors are using ETFs (up from 42% two years ago); more than 40% of advisors said that their clients have relationships with two or more investment advisors; and minimum account sizes continue to increase for firms who require them (up to an average $408,000 from $345,000 a year earlier).

   The seventh annual Rydex AdvisorBenchmarking Study was conducted through online surveys of 913 RIA firms between February and May 2007. AdvisorBenchmarking is a free practice management program for RIAs, and is an affiliate of Rydex Investments.