SOURCE: Rydex Investments

September 17, 2007 08:30 ET

National Survey Finds Registered Investment Advisors Enjoying Record Success

But Need to Watch Out for Profit Margin Squeeze, According to Rydex AdvisorBenchmarking

ROCKVILLE, MD--(Marketwire - September 17, 2007) - Business continues to boom for registered investment advisors (RIAs). In 2006, assets were up 15%, profits were up 13%, revenues were up 18% and the number of clients increased by 7%, according to a survey of 913 advisory firms by Rydex AdvisorBenchmarking. The picture isn't completely rosy -- for the first time in five years, profit margins slid, indicating a warning for advisors to examine their businesses and identify ways to do more with existing resources.

"While times are good, this slide in profit margins may serve as a wake-up call for advisors to identify efficiencies in their businesses," said Maya Ivanova, research manager for Rydex AdvisorBenchmarking, Inc. She also noted that, according to the survey, very few advisors target or focus their businesses on any specific client characteristic beyond a wealth range, which ranked as the most important criteria for 65% of advisors. "Most industry pundits agree that advisors should have a more focused target market for their practices so their time is more effectively spent. Similar clients will have similar needs, and advisors who understand and have expertise with those needs will have an advantage over advisors who are trying to be all things to all people. These results show that advisors need to analyze their client bases and look for commonalities that may reveal logical market niches for them."

Ivanova also notes that, "Advisors are getting smarter about utilizing one of their best resources -- their staff." Advisors, faced with time and resource constraints are increasingly turning to staff to help with client relationships and client meetings. Advisors are also investing in their staff -- not necessarily in the form of increased compensation, but through training and professional development.

The survey also included these findings:

--  For the first time in three years, advisors raised their AUM fees,
    with 71% of advisors raising fees.
--  For the first time in several years, profit margins retreated--
    reflecting the 20% increase in expenses.
--  Advisors are creating more mentoring environments for their employees
    via paying for seminars, CE courses and licenses. They're also delegating
    more client meetings to employees.
--  Advisors feel well-equipped to handle the investment needs of
    retirees, but feel ill-equipped on noninvestment issues, such as health
    care and housing needs.
--  Nearly 75% of advisors are using ETFs (up from 42% two years ago).
--  More than 40% of advisors said that their clients have relationships
    with two or more investment advisors.
--  Minimum account sizes continue to increase for firms who require them
    (up to an average $408,000 from $345,000 a year earlier).

About the Survey

The seventh annual Rydex AdvisorBenchmarking Study was conducted through online surveys of 913 RIA firms between February and May 2007.

About AdvisorBenchmarking, Inc.

AdvisorBenchmarking, Inc. is a research and analysis center focused on the RIA marketplace. Through its survey web site,, the firm conducts multiple surveys every year of advisors covering a host of business and investment management practices. The findings and analysis of the data are then released to the marketplace in the form of annual studies, quarterly research notes and monthly newsletters. The service is aimed at helping advisors grow and enhance their firms by comparing their businesses to others, highlighting the best practices of the most successful advisors in the business. AdvisorBenchmarking is an affiliate of Rydex Investments.

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