RIAs embraced technology in 2020, a year that saw new challenges brought on by the pandemic — and it paid back big time, in more clients, assets and revenues, according to Charles Schwab's 2021 RIA Benchmarking Study, released on Tuesday.
“2020 created an atmosphere of innovation that helped advisors reimagine how they engage with clients, prospects and staff. These experiences will help advisors thrive as the RIA industry continues to grow,” said Lisa Salvi, managing director of business consulting and education at Schwab, in a press release.
From client management relationship systems to portals to share information with clients, the pandemic encouraged more technology usage throughout the RIA industry, the study found.
Over 1,300 advisory firms representing $1.5 trillion in assets under management participated in the study, conducted between January and March 2021. It contains self-reported data from firms that custody their assets with Schwab Advisor Services or TD Ameritrade.
Helen Stephens, founder of Aspen Wealth Management, said on a Schwab media call Tuesday that she uses technology like web analytics to write content her clients find useful and to bring in new clients.
“What kind of content are people interested in? What are they reading? How do they navigate our website? What are the channels that are feeding into our website? We track all of that very heavily,” she said. “We spent a lot of time in our strategic planning process focusing on that.”
Here are some more points from the study.
- Firms experienced growth in 2020, and assets under management and revenue grew — 14.5% and 7.5% respectively. This indicates a positive trajectory into 2025, according to the study.
- Assets under management growth rates were higher than the 5-year compound annual growth rates from 2016 through 2020.
- RIAs had success with digital business development. Over 70% of firms generated leads from their websites, virtual events and online advertising.
- 68% of all advisors met or exceeded their client growth goals. Client growth remained consistent even as firms switched to virtual interactions.
- Having clear strategic and succession plans is critical for firm success. Seventy-three percent of top-performing firms had written strategic plans, and 71% of top-performing firms had written succession plans.
- Documenting an ideal client persona and client value proposition helps RIAs define their offer and drive referrals.
- Firms anticipate engaging with some clients virtually even as in-person interactions resume.
