RIA Trend Report 2016: Financial Summary

RIA Trend Report 2016: Financial Summary

Financial Performance

In light of another solid year in the U.S. equity market, it comes as no surprise that 2014 was a very good year for advisory practice financial performance. The median number of advisory clients increased by 26%, to 137 from 109. Growth in assets under management (AUM) slightly lagged client growth, coming in at 18% year-over-year to $50 million. Revenues increased 12% to $387 thousand, implying that the median fee as a percentage of AUM fell slightly, to 78 basis points from 82 basis points. The decline in average fee, while small, does contrast with the flat fee performance we observed in last year’s responses. However, the median advisor practice also demonstrated excellent control of non-compensation expense growth in 2014, noting an increase of only 4% to $48 thousand. The reported revenue growth, coupled with modest increases in expenses, generated solid operating leverage, with median profits up 19%, to $136 thousand, implying a profit margin improvement to 35.0% from 33.0%. 

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Next Part 2 of 6: Assets Under Management

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