Registered investment advisors with more than $1 billion in assets under management are experiencing robust growth, in part because of their innovative use of technology, according to a Charles Schwab study released today.
These large firms are more likely than smaller firms to leverage technology to improve the client experience, the company said in its "2020 Benchmarking Study" for firms with $1 billion or more in AUM.
For example, large firms are more likely to enable clients to use digital signatures for custodian forms and use virtual meeting technology than firms with less AUM, the study said.
The Schwab 2020 Benchmarking Study, which was conducted from January through April, included 1,010 firms and was released in its entirity in July. Schwab then did breakouts on data for small firms (those with less than $100 million in AUM) that was released last week, and on data for large firms (those with more than $1 billion in AUM) that was released today.
The data for firms with $1 billion and up showed their top goal has remained the same from 2019, which is acquiring new clients. Improving productivity through technology is also an important goal. In addition, the firms said they wanted to enhance strategic planning.
Firms with $1 billion or more in AUM reported robust five-year compound annual growth rates in the following areas: AUM increased by 9.2%; revenue by 7.4% and the number of clients by 4.4%. The study also found that assets added by new clients was more than the growth of assets from existing clients.
In addition, the study showed large firms are more likely than smaller firms to have written strategic and succession plans in place.
Successful firms have “a continued focus on net organic growth that helps smooth the impact of volatile market conditions, [and] they document their ideal client persona and client value proposition,” the report said.
Like with the findings in the earlier report that covered firms of all sizes, the large RIAs identified marketing strategy and growth strategy as the top areas of their businesses that could benefit from outside help.