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Schwab RIA Study Shows Advisors Moving Full Speed Ahead With Growth Plans

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Determined to buck the nation’s trend toward sluggish economic growth, independent RIAs are charging ahead with plans to grow their businesses, says a Charles Schwab Advisor Service study released Wednesday, July 7.

The most striking findings of the Schwab 2010 benchmarking study show that 84% of RIAs plan to grow aggressively or moderately over the next five years and that 88% have bought technology with the objective of enhancing client service. In addition, net new asset flows from new and existing clients have remained positive, with the typical firm adding $6 million in assets, representing a 4% growth in assets under management.

“The independent advisor model continues to prove its staying power and appeal to customers as the industry emerges from a difficult past few years for the markets and economy,” said Bernie Clark, senior vice president and head of Charles Schwab Advisor Services, in a release. “Despite lower revenues and compressed profit margins, our independent investment advisor clients have remained profitable and continued to grow by focusing on serving their clients and adapting their businesses to focus more on efficiency and expense management.”

A total of 870 firms managing more than $300 billion in combined assets participated in Schwab’s RIA benchmarking study, which is designed to capture trends and best practices in the industry based on the experiences of individual firms in 2009. Schwab’s annual report covers topics including advisor asset and revenue growth, sources of new clients, products and pricing, staffing and productivity, technology and operations, and firm economics.

Other findings from the study show that despite lower revenues, the median operating income for RIA firms participating in the study remained positive at 10.1% in 2009 compared to 15% in 2008. While 58% of advisors in 2009 were satisfied with their growth in the last three years compared to 65% in 2008, firms added only 2.6% more clients in 2009 versus 5.3% in 2008. Referrals continued to be an essential driver of growth, accounting for 83% of advisors’ new clients.

Read a story about Schwab’s Advisor University and TD Ameritrade’s RIA training portal from the archives of