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(Graphic: Charles Schwab)

Although client referrals and COI are a primary channel for RIA growth, according to the study, some firms are also looking to non-organic means to achieve growth – specifically, by acquiring another firm. Approximately 25 percent of RIAs in the $100 million to $1 billion AUM segment indicated they are actively seeking to acquire another firm. Among firms managing $1 billion or more in AUM, 34 percent are actively looking to acquire another firm. Among the fastest growing firms, 1 in 5 reported plans to acquire another RIA while 1 in 3 of all other firms is looking to acquire.

“With the compelling benefits of increased scale, it’s not surprising that RIAs are eager to move to the next level with their business,” said Beatty. “Whether through organic or non-organic means, the path to growth is a strategic decision that firms are weighing at the individual level. The study results can help them make these decisions armed with better information based on real data from their peer groups.”

An Eye on the Next Generation

Looking to the future, firms are increasingly eyeing the next generation of advisors and identifying a plan for succession. Here, too, the strategy is further along at larger firms. Among RIAs with at least $1 billion in AUM, 64 percent reported having established a formal succession plan. Sixty percent of firms with $250 million to $1 billion in AUM have an established plan, while at firms managing $100 million to $250 million in assets, 41 percent have a plan.

Finally, technology integration appears to be reaching a critical mass, with just 38 percent of study firms citing it as a challenge to their firms, versus 59 percent saying it presented a challenge in the previous year. Additionally, digital strategies in 2013 are viewed as a means to communicate and enhance the client experience. From an operational standpoint, 86 percent of firms now invest or plan to invest in the next 12 to 18 months in workflow technology; 73 percent now invest or plan to invest in mobile technologies; and 67 percent invest now or plan to invest in cloud-based technologies.

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