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Registered Investment Advisor Survey 2007: A Successful Business Model in Wealth Management

Registered Investment Advisor Survey 2007: A Successful Business Model in Wealth Management

RIAs have experienced asset growth of 10% annually since the last market downturn of 2001. Going forward, RIAs expect to grow their firms by 21.1% annually, from US$106 million in client assets at the end of 2006 to US$155 million at the end of 2008.

Boston, MA, July 30, 2007 – A new Impact Report from Aite Group, LLC analyses the Registered Investment Advisor (RIA) business model with particular focus on practice sizes and growth, client segmentation, revenue and product composition, and practice management and compliance. Entitled Registered Investment Advisor Survey 2007: A Successful Business Model in Wealth Management, the report reveals the results of a study of registered investment advisors, carried out in June 2007 by Aite Group.

RIAs have experienced a healthy growth rate, adding approximately 10% annually since the last market downturn of 2001. Going forward, RIAs will fare even better, expecting a growth in client assets of 21.1%. RIA firms differ hugely depending on their target client segments, their registration, their revenue models, etc. While many firms follow the classic picture of the SEC-registered, fee-only business model with a focus on the mass-affluent and high-net-worth client segments, the RIA market proves to be a lot more complex than that. Dual-registration has become increasingly more popular amongst RIAs (44% of the surveyed population). Revenue models also include a significant portion of one-time consulting fees, with commissions playing an important role. The range of clients RIAs target reach both ends of the wealth spectrum, with 40% of firms focusing on multiple wealth segments. Firm sizes vary from those having a couple of million in client assets to those that manage well over a billion dollars.

"The Registered Investment Advisor market has been a big success story within the wealth management industry," says Alois Pirker, senior analyst at Aite Group and author of the report. "Setting up an RIA firm allows advisors not only to become independent, but to implement the type of firm that allows them to best-serve their clients. The growth experienced in the RIA market clearly shows that clients appreciate this approach. At the same time, due to the fragmentation and inherent diversity of this market, service and technology providers find it difficult to address the needs of these advisors in a scalable manner."

In a separate Impact Report, Aite Group will analyze the service and technology requirements of RIAs as well as their satisfaction level with the solutions they currently deploy.

This 25-page Impact Report contains 19 figures and one table. Clients of Aite Group's Wealth Management service can download the report.