Small RIA firms are doing well in the midst of financial turmoil, according to the Schwab 2020 RIA Benchmarking Study for firms with less than $100 million in AUM, which was released yesterday.
The firms showed annual growth rates averaged over the last five years of 7.7% for AUM, 7.7% for revenues and 4.6% for the number of clients, the report said. In July, Schwab released overall results for the study.
More than half of the firms (52%) set the same number one goal as they did last year, which was acquiring new clients. Improving the satisfaction of existing clients came in second.
The small firms saw net organic growth added twice as much to their businesses as larger firms. The growth “has helped RIAs of all sizes smooth the impact of the volatile markets,” the study said. In 2019, firms with up to $100 million in AUM reported their new-to-firm assets were more than three times higher than new assets from existing clients.
Small firms identified marketing and compliance as their two most troubling areas.
Schwab made several recommendations for small firms to continue their growth rates, including focusing on strategic planning with an innovative mindset.
“Establishing a shared vision for the future, creating alignment and driving effective execution power your growth engine and provide a clear understanding of the future,” Schwab said.
In addition, “creating a cycle of opportunity to attract and retain top talent helps ensure continuity for your firm’s people, culture and values,” the study said.