RIA revenues improved over the past three years, but that growth may be vulnerable to market changes, a new study finds.

BNY Mellon’s Pershing Advisor Solutions released the results of the 2018 Study of Pricing & Profitability, which finds that RIA revenues have improved from 2015, the last time this study was conducted.

The study found the median revenue growth was 12%, up from 7% in the 2015 study. Meanwhile, operating profit margins remained consistent at 25%.

However, the study — which includes responses from 385 advisory firms — also finds that growth in assets under management is predominantly driven by market performance.

“That the main growth driver for RIAs is the overall performance of the market should be a flag for our profession,” Gabriel Garcia, managing director and head of relationship management at BNY Mellon’s Pershing Advisor Solutions, said in a statement. “With the economy still running high, now is the time for firms to take a critical look at their business and identify areas of investment and improvement.”

According to the study, market performance beat out referrals or business development as a growth driver. Of the 19% increase in AUM across firms, market performance made up almost half of the growth at 8%. Business development efforts contributed to 5% of the growth.

Also, firms have yet to realize meaningful productivity gains from new hires, even as firms have gone on a hiring spree, the study found.

Nearly half of all firms (49%) responding to this year’s study hired support advisors. Similarly, there was an increase in the number of firms hiring service advisors (20%).

However, as firms have ramped up hiring to build capacity, average revenue per professional has remained stagnant at $440,000, compared with $442,000 in 2015, the study finds.

“First and foremost, firms have to find ways to maximize their investments in new hires,” Garcia said. “Training is critical in that respect. Further, firms need to increase their focus on developing marketing and client experience strategies to help differentiate themselves in a demanding economy and increasingly competitive marketplace.” —Emily Zulz