From the March 2008 issue of Investment Advisor • Subscribe!

Fast Growing RIAs Tied to Breakaway Brokers

A new study commissioned by Fidelity Investments of the fastest growing RIA firms found that firms that grew their assets under management by more than 100% over the past three years averaged nine years in the business, had $215 million in AUM, and tended to have been founded by a breakaway broker. Gail Graham, executive VP of Fidelity Institutional Wealth Services, said that those breakaway brokers tend to have the right background to achieve growth, including great sales skills, but pointed out that "they also have the right clients"--high-net-worth individuals and small institutions like endowments and 401(k) plans. The telephone survey of 436 RIA firms with at least $25 million in AUM was conducted last summer by Northstar Research Partners; 75% of the respondents were not customers of Fidelity's RIA custody arm, notes Graham, and three-quarters were wealth managers, defined as advisors whose self-described main service offering was providing holistic financial planning, not asset management.

The study, Fidelity RIA Metrics: Profiles of the Fastest Growing Firms, found that in 2008 even these fastest growing firms expected to be challenged by compliance issues, obtaining new clients, and improving back-office efficiency.

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