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Marketing Helped Top RIAs Grow New Assets Twice as Fast in 2017: Schwab Study

It wasn’t about how much money firms spent, it was how they spent it.

Effective marketing helped top registered investment advisors grow at twice the rate other firms did in 2017, according to an annual survey by Charles Schwab.

The fast-growing firms in the 2018 RIA Benchmarking Study by Charles Schwab, defined as the top 20 percent of firms with at least $250 million in assets under management, had a 5-year net organic compound annual growth rate of 15.4 percent—nearly four times the rate of all other firms.

In 2017, those same firms continued to grow, adding an average of $48 million in net new assets stemming from nearly double the average number of clients. Large RIAs managing billions of dollars aren’t skewing the numbers. New client assets accounted for more than double the growth of existing client assets across firm sizes.

Jonathan Beatty, a senior vice president at Schwab Advisor Services, said a virtuous cycle is helping some firms grow faster than others. More wealth managers are professionalizing and technology is improving, freeing up time for advisors to spend on other parts of their business, including marketing.

In turn, better marketing is attracting more new clients and assets and enabling RIAs to invest in other value-added services for which they might not have previously offered. “Success begets success,” Beatty said.

One example Beatty gave was an increasing number of medium-sized firms expanding their relationship management services. More firms are hiring employees to help families navigate their own internal dynamics that wealth can make choppy, a service more commonly offered by firms that cater to ultra-high-net-worth clients.

In the case of marketing, Beatty said that no dollar amount that some RIAs are spending on a single strategy are separating fast-growing firms from others. The firms leveraging marketing successfully are those that have identified an ideal client persona and built a strong value proposition for that group. Firms that documented these strategies saw 41 percent more assets from new clients than others, according to the report.

The study, in its 12th year, is one of the largest in the industry, with more than 1,200 firms participating in 2018. For first time in its history, average assets per client also passed more than $2 million for firms with over $250 million in assets under management.

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