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.”