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Snapshot Compares Top-Performing RIAs To Peers



High-performing registered investment advisor (RIA) firms, which typically deliver between one and two times the growth, profitability and productivity of other firms, use technology to help them deliver the big numbers, according to the 2013 Fidelity RIA Benchmarking Study.

RIA firms classified as “high-performing” deliver 1.5 times the growth, 1.3 times the profitability and 1.5 times the productivity of “all other eligible firms,” firms outside the top 25 percent of eligible firms, according to the study.

In addition to adapting to technology more quickly, the highest-performing RIA firms manage more clients per advisor and have more assets under management.

“High-performing firms are growing faster and smarter than other firms, reporting a growth rate that is 50 percent higher than that of all other eligible firms,” said David Canter, executive vice president and head of practice management and consulting with Fidelity Institutional Wealth Services.

The Fidelity benchmark report comes at a time when growth patterns for RIAs represent “one of the most buzz-worthy trends” among financial advisors and asset management, said Bing Waldert, a director with Cerulli Associates.

“RIAs are the sole growth story in a shrinking industry,” Waldert said, in comments accompanying a separate report issued by Cerulli in December. RIAs grew at an annualized rate of 8 percent from 2004 to 2012, the Cerulli report found.

That compares with other distribution channels – regional, insurance, independent and bank broker-dealers, along with wirehouses – which all shrank at an annualized rate of between 1.2 and 2.5 percent over the eight-year period, the Cerulli study also found.

RIAs are registered with the Securities and Exchange Commission (SEC) and state regulators. They are worth a closer look because of their solid growth rates compared with the rest of the intermediary world.

The ability to effectively harness the right technology and to approach technology in a pragmatic way allows top performing RIAs to attract and retain more clients, and close business faster, the Fidelity study found.

“In addition to attracting and retaining more of the right clients, high performing firms are focusing on more effectively harnessing the technology they have instead of chasing the very latest innovations,” he said.

The snapshot of top RIAs and how they stack up against the rest of RIAs provides striking differences in performance indicators.

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High-performing RIA firms, for example, reported 15 percent compound annual growth (CAGR) in assets under management from 2009 to 2012 versus 10 percent CAGR for the rest of the RIAs.

The high-performing RIAs also reported 67 percent profitability in median Earnings Before Owners’ Compensation (EBOC) margin versus 50 percent profitability in EBOC margin for the other RIA firms.

High-performing RIAs generated $333,000 in 2012 revenue per full-time equivalent worker versus $219,000 per FTE at other RIA firms, Fidelity’s study also found.

The survey also found that at high-performing RIA firms, advisors each had an average of 93 clients compared with an average of 68 clients per advisor at other firms. Also, advisors at top-performing RIAs each had an average of $117 million in assets under management (AUM) versus $81 million at the other firms.

High-performing RIAs generated $910,000 in annual revenue, on average, per advisor compared with $542,000 in annual revenue, on average, per advisor at other RIAs.

At top-performing RIA firms, existing and departing clients withdrew only 5 percent of AUM compared with 9 percent of AUM at other firms. The study also found that among high performers, 77 percent of advisors close business in two or fewer meetings compared with 57 percent of advisors closing business in two or fewer meetings at other firms.

The study also found that 74 percent of high-performing RIAs described their technology environment as strong, but not cutting edge, compared with only 53 percent for all other RIAs who described their technology in those terms.

Top performing RIA companies are also more likely to make technology a strategic priority, the Fidelity study found.

“When it comes to smart technology adoption, it’s no longer just about improving efficiency,” Canter said. “RIA firms need to stop and ask – is this helping me grow my business? Does this enhance my clients’ experience?”

Posting higher numbers doesn’t mean advisors are necessarily better, of course. It only means that the higher performers are more productive. The ultimate arbiter of a good RIA isn’t other RIAs, but the clients the RIA serves.

is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at

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