RIAs leaned on organic growth to weather 2022, Schwab study shows
During the 2022 economic environment that saw both stocks and bonds decline in historic fashion, driving down assets under management across the financial planning industry, organic growth stood out as a bright spot for the industry.
According to the 17th annual 2023 RIA Benchmarking Study released Thursday by Charles Schwab, assets from new and existing clients both reached their second-highest point in five years, with client growth maintaining a steady pace of 6.2%.
“We’ve learned that RIAs are good at retaining clients,” said Lisa Salvi, managing director of business consulting and education at Schwab.
The comprehensive report is based on surveys of 1,300 RIAs with custody relationships at Schwab and TD Ameritrade. The participating firms, which represent $1.7 trillion in combined assets under management, experienced a 7% decrease in assets under management last year, which compares to a 14.3% decline for the classic model portfolio of 60% stocks and 40% bonds.
“It was a very challenging year,” Salvi said. “But when we’ve had challenging markets, that’s when the value proposition of advisors stands out.”
Looking beyond the broad averages for asset levels tells a more significant story about how some firms are separating from the pack.
Last year those firms with less than $250 million in assets averaged a 5.1% asset decline and 6.2% net organic growth. That compares to 20.1% asset growth and 9.4% net organic growth in 2021.
For firms with more than $250 million, average assets fell by 7.6% last year while net organic growth grew by 4.1%. That compares to 2021 when the category average assets grew by 21.3% and net organic growth grew by 7.8%.
The third category in the report is top-performing firms, represented by the
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