A majority of financial advisory firms met or exceeded their growth goals in 2020, which turned out to be a banner year for advisors despite the pandemic, according to Schwab Advisor Services.

Overall, 68% of the firms said they met or exceeded their growth projections, according to the Charles Schwab 2021 RIA Benchmarking Study, which was released yesterday. 

“Last year was a strong year” for acquiring new clients, increasing assets under management and adding to staff, Lisa Salvi, managing director of business consulting and education for Schwab Advisor Services, said during a web press conference on the release of the study. “2020 created an atmosphere of innovation that helped advisors reimagine how they engage with clients, prospects and staff. These experiences will help advisors thrive as the RIA industry continues to grow.”

The study included 1,340 advisory firms of all sizes with a total of $1.5 trillion in AUM, many of whom experienced remarkable growth, the study said. AUM for the median firm was up 14.5%, revenue was up 7.5% and the number of clients increased by 4.7%, the study said.

The median firm now has $439 million in AUM. If the current rate of growth is continued for the next five years, the median firm will have $791 million in AUM, Salvi said.

As an example, Helen Stephens, founder of Aspen Wealth Management based in Centennial, Colo., said during the press conference that her firm “already blew through its 2023 goal for AUM growth. We added 30% in new assets already this year.”

Stephens noted that her firm collects detailed information on how new clients come to them. The pandemic prompted the firm to “rethink our client experience and how we deliver client services. We reviewed our ideal client persona and made sure prospects could see on the website the deliverables they were going to get.”

Scott Wood, co-founder and CEO of Dallas-based True North Advisors, said the growth of some firms like his can create problems in hiring the number of new staff members needed to keep up with the added work. “You have to know you can teach the new staff all of the firm’s processes” in order to onboard them successfully, he said..

To hire and retain good talent, advisory firms should have an equity sharing program, a robust employee benefits package and a clear career path for its staff, Salvi said.

She also noted that organic growth, which does not count performance growth, is an indication of the health of an organization and the median for firms with more than $250 million in assets was an organic growth of 4.7% in AUM for 2020.

High performing firms had a retention rate for clients of 97% last year, the study said.

Firms that can specifically say what their ideal client persona looks like are more successful, Salvi and Wood said.

“In the beginning we would take any client who would pay us,” Wood explained. “Now, we know our ideal client persona and we review it every quarter. For instance, we want delegators—people who want someone else to do the work for them, rather than do-it-yourselfers. Having this information empowers our advisors.”

The pandemic forced firms to adopt new practices that might have been considered impractical in earlier years, they said. Stephens said her firm, like many other high performers, moved to digital formats for everything from meetings with existing clients to identifying and introducing the firm to prospects. The firm is going to optimize these new formats going forward, she said.

Advisors who participated in the study said the conversion that prompted firms to move to digital formats for some of the work made their firms more productive because staff members used their time more efficiently.

“Top performing firms tried a variety of new formats to see what worked for them,” Salvi added.