White Paper Features Best-Managed RIA Firms

The white paper, “Best-Managed Firms: The Business of Serving Clients—Productivity in high-touch business,” is the latest in the Schwab Market Knowledge Tools (MKT) series (see “Schwab Announces Papers for Independent Advisers“). According to a press release, it examines how successful advisers manage their business across five key areas: financial advice and investment management, relationship management, operations and client support, strategy and planning, and marketing and business development. The information was taken from Schwab’s 2007 RIA Benchmarking Study.

Charles Schwab said the firms shared a few common success factors, including:

• Successful firms tend to focus on their strengths, such as integrated wealth management or asset allocation strategy, to improve their competitive advantage.
• Many of the firms included in the report seek to provide clients with a consistent service experience across different adviser teams.
• Many of the Best-Managed Firms reported that they centralize key firm functions, such as investment management, client relationship management (CRM), and portfolio management systems, as opposed to having individual teams operate in silos, to avoid unnecessary duplication of roles and responsibilities.
• Referrals account for 88% of the best-managed firms’ new client business, and these firms are growing 50% faster from referral sources versus all other firms.
• Successful advisers are more likely to set time aside for business strategy and planning than other firms.

“A significant finding in the report is that focusing on the business of running an advisory firm and focusing on working with clients do not have to be mutually exclusive,” said Trish Cox, chief operating officer of Schwab’s Advisor Services division, in the release. “In fact, the firms in the report prove that creating a more scalable and efficient business can actually improve service levels, because it gives advisors more time to work with clients.”