The Deceiving Data that Devalues
A recent custodian survey of over 1,000 RIAs reveals that the median firm’s AUM has grown by 50% in the past three years while profits have increased by 27%.
Considering that during this same period the S&P returned almost 40% (not including dividends) AND the Average Revenue Per Client (ARPC) rose only 8%, many RIAs are still dependent on the “market” to grow most of their Top Line.
During this same three-year window, the percentage of clients under $500k has remained static at 43%, generating only a meager 10% in revenue. It seems many RIAs continue to struggle with significantly increasing the size of their average investor.
Addition by Subtraction
The organizational goal should be to GROW FIRM AUM no matter the markets’ performance but to do so while also REDUCING the number of low-revenue clients served!
Adding new “Ideal Clients” will increase average client size but not as quickly as when combined with a reduction in the number of smaller clients that skew your overall average size relationship. For more information on adding new “Ideal Clients”, read the Successful Planning tab in this section, or click HERE.