RIA Organic Growth Swooned in 2022: Fidelity
Organic growth slowed considerably for wealth management firms in 2022, sliding below 4% after a high of 8.2% in 2021, driven largely by a nearly 40% decline in assets under management from both new and existing clients, according to a Fidelity benchmarking study.
Firms with less than $1 billion in assets increased at 3.2% last year, excluding market appreciation and mergers and acquisitions activity, down from 8.2% the previous year. Meanwhile, larger enterprises increased at a 3.6% annual rate, down from 8.4% the previous year.
The 2023 Fidelity RIA Benchmarking Study also discovered that advisors were accepting more clients with fewer assets.
The median number of clients per advisor at RIAs with over $1 billion in assets in 2022 increased by six to 84, and those clients had median assets of $2.4 million, down from $2.8 million reported in 2021.
RIAs with less than $1 billion reported a median of 84 clients per advisor last year, up from 79 the previous year, however the study predicted 97 clients per advisor in 2020. These smaller RIAs’ clients had median assets of $1.2 million, down from $1.5 million in 2021.
Approximately 39% of clients at firms with less than $1 billion under management had less than $500,000 in assets, while similar groups represented 27% of all clients at bigger RIAs.
“It’s important for firm leaders to continue prioritizing ways to enhance their business model, especially during times of market uncertainty,” said Anand Sekhar, VP of practice management & consulting at Fidelity Institutional.
The study included 245 RIAs and was performed between April 17 and July 4. An independent third party conducted the study, which included almost 3,500 advisors.
