What distinguishes the best performing RIAs from all others?
According to Schwab’s 2020 RIA Benchmarking Study, the top 20% of performers have adopted several practices at much higher rates than their peers:
- A written strategic plan
- A written succession plan
- An ideal client persona
- A documented client value proposition that deepens with the addition of value-added services
The adoption rates of these practices by top-performing firms ranged between 66% and 75% compared to 44% to 66% for other firms, and they paid off.
For example, firms that had adopted an ideal client persona and client value proposition attracted 28% more new clients and 45% more new client assets in 2019 than other firms, according to the benchmarking study, which was based on a survey of 1,010 firms with a total $1.1 trillion in AUM conducted between January and April.
In addition, top-performing firms used digital touchpoints such as texting, e-signatures and virtual client meetings and screen sharing more frequently than other firms, and they had a greater focus on net organic growth — assets of new clients minus assets of departed clients — which can help offset the impact of volatile markets. More of those top performers also adopted standardized workflows within their customer relationship management system for more than 50% of tasks.
As a result of these factors, top-performing RIAs grew their assets from new clients at twice the rate of other firms in 2019, driven by markets and referrals from other professionals such as accountants and estate lawyers (so-called centers of influence) — 8.3% compared with 4.1%.