As investors get older and their decumulation continues to havemore impact, firms will have to be more reliant on their ability tobring in new clients.

The 2018 RIA Benchmarking Study from Charles Schwab examines howthe independent advisory industry remains on a growth trajectory,and how much new clients play a role in that growth.

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The data from Schwab's latest study indicates assets undermanagement grew 16.2 percent in 2017 at the median versus9.6 percent in 2016.

“Certainly the market played a role in [the 2017 growth], buteven when you peel away the market performance and net deposits byexisting clients, you can see the acquisition of new clients wasquite robust in 2017,” Jon Beatty, senior vice president of salesand relationship management at Schwab Advisor Services, explained.The study found that adding new clients has an outsized impact onAUM growth.

Asset growth from new clients is more than twice that fromexisting clients for a majority of firms, according to thestudy.

“The acquisition of new clients brings in about twice the amountof assets that are earned through the existing client base,” Beattytold IA. “As you expect, as the investors get older anddecumulation continues to have more impact, firms will be morereliant on their ability to bring new clients in to retain growthrates and retain assets under management. That is a criticalbusiness measurement to track and make sure you're understandinghow you're doing as a business owner.”

Ideal clients

According to Beatty, the firms that are most successful inattracting new clients are focusing their ability to appeal to andmeet the needs of their ideal clients.

The study finds that firms that document both an ideal clientpersona and a client value proposition — of which more than half offirms do so — win 26 percent more new clients and41 percent more new client assets than those that donot.

Beatty described the “ideal client persona” as the idea of“creating a focus within the firm on the particular attributes ofclients that you work the best with.”

“We've talked a lot in the industry about services drivingdifferentiation, and you can see that trend continues. But the ideathat there's another dimension of creating differentiation, whichis creating a curated experience around a specific type of investorpersona,” he added. Beatty said that he's seen examples of investorpersonas around types of experiences.

“For example, some firms specialize in people who love to traveland create a client experience both around investment managementprocesses as well as other services they might deliver to that typeof client,” he explained to IA.

Another example he's seen is a firm that likes to specialize inpeople who are interested in wine.

“They can create investment outcomes around wine, they cancreate community experiences around wine experiences,” Beattysaid.

Another example is family governance, according to Beatty.

The study found that a growing number of firms have addedservices that address clients' unique needs. Charitable planningservices were offered at 80 percent of firms in 2017, upfrom 63 percent of firms in 2013. Family educationservices were offered by 72 percent of firms in 2017,compared with 56 percent in 2013.

Several other services that became more widely adopted in 2017include: tax planning (76 percent), lifestyle management(33 percent), bank deposits (32 percent), lifeinsurance products (31 percent) and annuities(31 percent).

The 2018 RIA Benchmarking Study, which was fielded from Januaryto March 2018, contains self-reported data from 1,261 firms thatcustody their assets with Schwab Advisor Services and representslightly over $1 trillion in assets under management. Thisself-reported information was not independently verified, accordingto Schwab.

Participant firms represent various sizes and business models.They are categorized into 12 peer groups — seven wealth managergroups and five money manager groups — by AUM size.