The registered funding advisor house noticed robust development in 2024, however success might also be inflicting capability and repair strains, in line with Charles Schwab’s annual RIA benchmarking survey.
For its annual research, Schwab surveyed 1,288 RIAs representing $2.4 trillion in AUM from January to March 2025. This yr’s survey mirrored the comparatively robust markets and shopper demand.
In consequence, Schwab discovered common compound annual development charges from 2019 by 2024 of 12.6% for property underneath administration to $615 million, 12.4% in income to $3.8 million, and 6% in shopper development to 345. As well as, the companies hit five-year highs on common relating to new shopper development. Even natural development, one of many hardest needles to maneuver, ticked up on common.
“We’re seeing a whole lot of development,” mentioned Lisa Salvi, Schwab’s vice chairman of advisor providers, consulting and training. “Seventy-eight p.c of companies are hiring, which has been fairly constant for this business by the years and exhibits the demand within the sector.”
The research additionally discovered, nevertheless, that managing that development isn’t all the time simple. RIAs are in search of options to maintain up with shopper demand and the necessity to provide extra providers.
“There’s signaling of somewhat little bit of capability constraints,” Salvi mentioned. “We noticed amongst advisors’ prime priorities changing into extra productive by know-how, and bettering productiveness was their seventh prime precedence.”
Based on the survey, 68% of companies use synthetic intelligence to enhance effectivity. The highest makes use of for AI had been for administrative assist (43%), producing advertising and marketing content material (38%) and growing shopper correspondence (31%).
In the meantime, advisors supplied extra providers to purchasers total in 2024 than within the earlier yr. RIAs working in monetary planning, charitable planning, tax planning and technique, property planning and invoice fee have all risen since 2021.
Salvi mentioned it’s important for RIAs to be sensible and strategic about including providers to keep away from overreach.
“If you hold including providers and methods, it manifests in margin compression,” she mentioned. You’re including extra for a similar charge, and that may be an actual problem if you wish to give purchasers the highest-quality, gold-standard service.”
Hiring and preserving expertise to satisfy these wants was a prime precedence for RIAs. Recruiting employees to extend talent units and capability ranked No. 2 when it comes to strategic priorities, and buying expertise was the second-most cited cause for companies pursuing inorganic methods at 67%. (Rising AUM, income, and purchasers was the highest cause at 92%).
RIAs additionally noticed development by inorganic and natural means in 2024.
Concerning acquisitions, 19% of companies engaged in M&A in 2024, and 23% introduced on a number of advisors with a ebook of enterprise.
Web natural development was somewhat tamer, exhibiting slight upticks. Companies of underneath $250 million reported development of 9.2%, up from 7.8% in 2023. Companies over $250 million had been up simply 5% from a 4.9% price in 2023.
Schwab’s survey additionally contains its top-performing RIAs, that are the 20% that rank highest throughout areas together with internet asset flows, income, shopper attrition and employees attrition.
Salvi mentioned these companies had greater natural development at 12.5%, a soar from 11.6% in 2023.
She mentioned that’s partly as a result of them outperforming different RIAs in numerous areas of operations and apply administration.
As an illustration, prime performers have greater charges of making an “best shopper persona and worth proposition” to hone outreach applications and shopper service fashions. These companies are additionally extra prone to have an built-in advertising and marketing plan, gather shopper suggestions and doc their referral plans, that are constantly a significant driver of natural development.
“Referrals proceed to be the spine of development for the business,” Salvi mentioned. “However fewer than half of companies nonetheless don’t have a written technique [for referrals].”
Salvi additionally mentioned facilities of affect, although they take time to arrange, could be fruitful. She mentioned the top-performing companies lean into these relationships, despite the fact that, on common, it takes a couple of yr to get the primary referral.
Salvi did stress that RIAs don’t must do every part, significantly relating to advertising and marketing and social media. She really useful that companies establish their best purchasers and deal with the perfect channels to succeed in them.
“The one most essential factor you are able to do in what you are promoting is to be crystal clear in your best shopper persona,” she mentioned. “We actually don’t need [advisors] to spend time and valuable sources simply because different persons are doing it.”
This month, Schwab launched a brand new membership program for unbiased RIAs referred to as Schwab Advisor ProDirect. The subscription mannequin builds on Schwab’s custodial and advisor enterprise and targets advisors who wish to break free from captive fashions and launch their very own RIAs.