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What's the Biggest Question Advisors Need to Answer?

By Rita Raagas De Ramos November 14, 2018

“How do I maintain this pace of growth?” is the number one question Jonathan Beatty, senior vice president for sales and relationship management at Schwab Advisor Services, gets from advisors.

Charles Schwab’s 2018 RIA Benchmarking Study, released in July, shows the fastest-growing RIAs are making headway in attracting and signing new clients by focusing on a niche set of prospects.

Slightly more than half, or 51%, of the fastest-growing RIAs have a targeted “ideal client persona” for whom they offer a specific “client value proposition,” according the study.

And the RIAs that identified their ideal client persona gained 26% more new clients and 41% more new client assets in 2017 compared to firms that don’t have niche client targets.

The quality of the advisors’ client service plays a key role in growing assets, Beatty said at the Schwab Impact 2018 conference in Washington, D.C. last month.

“A client’s last best experience anywhere is their new minimum experience everywhere,” he said.

It’s all about producing bionic advisory firms.
Jonathan Beatty
Schwab Advisor Services

New services that are provided to clients are also critical in growing assets, according to Beatty.

That could be in the form of healthcare-related services or services that help clients deal with healthcare costs, generational wealth transfer, executive relocation or retirement downsizing.

Beatty referred to those examples as “financial life management,” which he says many advisors already actively engage in.

Advisors must also take advantage of technology to grow their businesses, according to Beatty.

“One challenge is how to marry” relationships, automation and the modern client experience, he said.

In a way, it’s all about producing “bionic advisory firms,” Beatty said, referring to firms capable of quickly onboarding new clients and taking in new assets.

Meanwhile, the fastest-growing RIAs are also strengthening their brand, investing in their personnel and maximizing the use of technology, according to the study.

For more than a decade, Charles Schwab has been studying the growth of the fastest-growing RIAs by examining the top 20% of RIAs in terms of client assets.

For this latest benchmarking study it surveyed 1,261 RIAs from January to March. Charles Schwab determines the fastest-growing RIAs by measuring the firms’ five-year compound annual growth rate in AUM. All the firms surveyed have at least $250 million in AUM.

For first time in the benchmarking study’s 12-year history, the average assets per client of the RIAs surveyed surpassed $2 million.

The study shows that RIA median AUM grew 16.2% in 2017, sharply higher than the 9.6% growth in 2016.