The RIA Profit Margin to Weather a Pandemic's Recession
Asset-based fee revenue at wealth managers plunged this month alongside the fastest-ever bear market in response to the novel coronavirus. At RIAs with thinner profit margins, that could mean drastically lower compensation and even cost-cutting.
In 2018, the median operating profit margin for RIAs managing between $100 million and $250 million was 28.9%, net compensation costs. RIAs that managed more had relatively similar margins ranging between 26.4% and 30%, according to Schwab Advisor Services’ 2019 RIA benchmarking study, its most recent annual report than surveys more than 1,300 firms, which self-report.