Independent registered investment advisors (RIAs) face a range of hurdles in the current environment – from market volatility to the growing costs of doing business in a slowly recovering economy.  Yet RIAs continue to show extraordinary resilience, according to the findings from Schwab’s 2012 Benchmarking Study (which can be found here). RIAs reported steady client growth and record increases in assets under management and revenue in 2011, up 3.8 % and 12% respectively from the previous year.  

To help put things in perspective, we sat down with Schwab Managing Director, Paul Stetz, who is based in Michigan. Stetz gave us an overview of some of the changing business strategies that advisors have recently adopted in order to overcome the slowdown in top line growth and cut costs to enhance profit margins.

Q: How has the current state of the economy impacted the RIA segment and their ability to attract new clients and grow their businesses?

A: The markets have definitely had a significant impact on how advisors are doing business today. Investors are more cautious now. They are hungry for holistic, 360-degree, guidance.  Advisors are responding by calling upon centers of influence like attorneys or CPAs, in order to deliver more collaborative, highly tailored, comprehensive and sophisticated advice.  It’s going a long way to meet the growing needs and goals of investors.

Q: Are there any specific ways in which advisors have evolved their business models to meet the changing needs of investors?

Sure, advisors have turned to becoming much more strategic in their business operations, taking a harder look at the clients they serve, the overall costs to serve those clients, and determining how to best serve them in both a profitable as well as meaningful way. Once they do this, advisors are able to better align their service models to fit the needs of each client segment. As illustrated in the result of our 2012 Benchmarking Study, this strategic approach is working for advisors and has even translated into topline growth for many firms.

Q: Can you tell us a little about how advisors are using technology to enhance their business operations and better serve their clients?

A: Advisors have become more deliberate about using customer relationship management (CRM) systems, which we call being more CRM-centric, meaning they use CRM as the hub of their technology. One of the transitions that advisors have recently made is in their focus on integrating other technologies into CRM and leveraging that integration in order to become more efficient, streamline costs and deliver a more consistent client experience.

Q: So in summation, advisors now have a more strategic lens through which to view their business operations? 

A: Exactly. Through this more strategic lens, advisors have been able to identify the types of clients that they are able to serve best, or are most profitable for their firm. This tactic not only helps them grow from a new business perspective, but it also enhances retention among existing clients and creates a more scalable business model to support the future growth of the firm.

The 2013 RIA Benchmarking Study from Charles Schwab will launch on February 5.


The RIA Benchmarking Study from Charles Schwab comprises self-reported data from advisory firms that custody their assets with Charles Schwab & Co., Inc.(Schwab).

All information contained in the Study is provided for general informational purposes only. All data is self-reported by Study participants and is not verified or validated. Each participating advisory firm submitted only one set of responses. The 2012 RIA Benchmarking Study was fielded February and March, 2012. The Study contains self-reported data from 1,025 firms spanning 2008 – 2011.

Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading and support services of Schwab.
Independent registered investment advisors are not owned, affiliated with or supervised by Schwab.

Investing involves risk, including possible loss of principal.

The Charles Schwab Corporation provides a full range of securities, brokerage, banking, money management, and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc (“Schwab”), Member SIPC, offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides deposit and lending services and products. Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading, and support services of Schwab. Independent investment advisors are not owned, affiliated with, or supervised by Schwab. Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company provide recordkeeping and related services with respect to retirement plans. Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

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