The 2021 Fidelity RIA Benchmarking Study

For institutional use. l © 2021 FMR LLC. All rights reserved.

Initial Findings Report

August 2021

The 2021 Fidelity RIA Benchmarking Study

As the importance of scale continues to rise and aspirations for growth abound, firms want to know what lessons they can learn from their largest peers. Interest is especially strong this year, in understanding how big firms have navigated the COVID-19 pandemic and the related challenges that we’ve all faced. With this in mind, we’ve included a new section in this report, focused on understanding how firms with $1billion or more in AUM have handled 2020, and how they’ve fared.

2021 Fidelity RIA Benchmarking Study

2 Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

The 2021 Fidelity RIA Benchmarking Study examined key metrics to help RIAs understand their performance in comparison with their peers, and to help them advance their business. The 2021 study, which includes data through 2020, focused on driving growth through business development activities, as well as other key areas of interest, including:

Financial Data and Client

Information

Strategy and Growth

Client Demographics

Offer and Pricing Technology

The online survey was conducted from March 26 through May 26, 2021, and it was administered by an independent third-party research firm not affiliated with Fidelity. Fidelity was identified as the study sponsor. A total of 211 RIA firms participated in the study. The results may not be representative of the experiences of all firms or indicative of future success.

We encourage our clients to view their own results against their peer groups on our results site: www.fidelityriabenchmarking.com.

Total AUM # of firms

<$99M

$100–$249M

$250–$499M

$500–$999M

$1B+

19

33

39

78

42Special Addendum on Firms with $1 Billion or More in AUM

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http://www.fidelityriabenchmarking.com/


2021 Key Findings

Growth • Three-year CAGRs for both AUM and

revenue are strong at 13.1% and 10.3%, respectively.

• Median organic AUM growth remains strong and stable, with new assets evenly split between new and existing clients.

• Top sources of new assets were generally on trend: 55% from client referrals, 20% from third-party referrals, and the final 25% from all other sources (including business development), though AUM from client referrals rose 8 percentage points compared to 2019 levels. Only 5% of clients made a referral.

Business development• Even in a pandemic, business

development programs remained a central focus and top priority for firms.

• The activities that comprised these programs have unsurprisingly shifted significantly toward digital channels. Firms are also reporting improvements in how effective these channels have been.

• As much as firms have stayed focused on it, business development has declined in value relative to client referrals, which account for the majority of new business. This is especially true among smaller firms.

Client focus • Again this year, assets and

professional investment advice remain concentrated with older generations. Seventy-six percent of advisory clients are over the age of 50, and 85% of advised assets are attributable to those clients.

• Advisors should consider ways to engage younger investors earlier in their wealth journey. Data from our 2021 Investor Insights study shows that 8 in 10 Gen YZ investors who have advisors report that they will likely stay with those advisors.

The year 2020 was one of tremendous change; a year of challenges and resiliency. In response to unprecedented disruption, firms shifted their focus and prioritized transformative investments in technology and strategic planning. Business development remained firms’ top priority, and they worked to embrace digital channels. Yet, most new clients and assets were sourced from client referrals. Strong growth trends in AUM and revenue remained intact, as profitability rose and productivity hit new highs. Firms haven’t made significant changes to their fee schedules or pricing models, but they have accelerated their practice of discounting fees, likely as an agile alternative to address fee pressure in the market. We’ve also seen an increase in firms including more services in their overall bps fee. Firms added new technology to enhance their client experience in a remote-first world, and firms that have invested and embraced tech more fully are seeing some benefits. Large firms face many of the same challenges, but they grew faster than their smaller peers, as they deployed bigger business development initiatives. They may also have benefited from a flight to quality and/or scale. There are many open questions about the future of the industry and the changes happening under our feet. What we do know is that the lessons of 2020—around disruption and adaptation, around scale and value—are worth learning. The firms that learn them will have a significant advantage as the next evolution takes shape, and we hope that this report contributes to that effort.

Strategic focus • Multi-year uptrends in prioritization of

business development and succession planning ended, as fewer firms included them in their top five initiatives this year. Even so, business development retained its position as the top initiative for firms.

• Instead, firms increased focus on transformative initiatives such as strategic planning and technology.

• Interest in outsourcing is growing, and there is some indication that firms that outsource are growing faster.

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0.73% 0.68%0.61%

$214

$332

$606

$1.5 $2.0$3.3

2014 2017 2020

4

Financial Data: Overview

Insights

• Established growth trends remained intact, as 3-year CAGRs for both AUM and revenue continued to rise. • Profitability also rose, as all measures of productivity reached new highs. • Overall expenses continued to decline, including a recent drop in indirect expenses that may be influenced by reductions in travel and other impacts of the pandemic.

Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

Strong RIA growth trends continued, despite the pandemic

53% 53% 57%

18% 22% 26%

2014 2017 2020

EBOC Margin (%) Operating Margin (%)

45% 41% 41%

37% 37% 33%

1 2 3

Direct Expenses as % of Revenue Indirect Expenses as % of Revenue

PROFITABILITY (mean) PRODUCTIVITY (median)

ASSETS AND REVENUE (median) EXPENSES (mean)

2014 2017

AUM per client Clients per advisor AUM per advisor Revenue per advisor

$1.1

M

$1.3

M

$1.8

M

2014 2017 2020

67 71

89

2014 2017 2020

$81M $100

M

$184

M

2014 2017 2020

$542

K

$608

K

$951

K

2014 2017 2020

Median AUM ($M) Median Revenue ($M) Median Revenue Yield (%)

2020

10.3%3-year

revenue CAGR

13.1%3-year AUM

CAGR

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6.0% 6.0% 5.7%

Strategy and Growth: Composition of Organic AUM Growth

5

Insights• Median organic AUM growth

remains strong at 5.7%.

• Over time, the composition of organic growth has shifted from a majority of new assets coming from new clients to an even split between new and existing clients. Firms have also benefited from a decrease in withdrawals.

• The top sources of new assets were generally on trend, with 55% from existing client referrals, 20% from third-party referrals, and the remaining 25% from all other sources, including business development and marketing activities. While this is directionally in line with previous years, new AUM attributable to client referrals was up 8 percentage points between 2019 and 2020. Surprisingly, the total set of client referrals were made by just 5% of all clients.

Please note that 2014 composition figures do not sum to 6% due to rounding.Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

CONTRIBUTORS TO ORGANIC AUM GROWTH (Excludes market appreciation and M&A activity)

New Assets from Existing Clients

New Assets from New Clients

Assets Withdrawn by Departing Clients

Assets Withdrawn by Existing Clients

-1.5%

-3.0%

5.3%

4.9%

2020 Composition of Organic Growth

-2.1%

-2.6%

6.5%

4.1%

2014 Composition of Organic Growth

Organic AUM Growth

2014 2017 2020

The composition and sources of organic growth has been stable over time

55%20%

25% Referred by clientsReferred by third partyAll other sources

Sources of New Assets FromNew Clients in 2020

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6

Improve the firm's marketing and business development efforts

Invest in new or existingtechnology

Improve strategic business planningand execution

Improve clientsatisfaction

Improve investmentperformance

Develop or enhance a succession plan

Strategy and Growth: Top Strategic Initiatives

42%

49% 53%51%

39%44%

71% 69%

56%

28%

35%

27%

39%

32%

37%36%

16%

14%

2014 2015 2016 2017 2018* 2019 2020

TOP FIVE STRATEGIC INITIATIVES FOR 2021

Insights• If nothing else, 2020 was a year of

shifting priorities. Recent multi-year uptrends in the prioritization of business development and succession planning initiatives ended, as fewer firms included them in their top initiatives this year. Yet, business development still retained its position as the top initiative.

• Firms instead increased focus on transformative initiatives such as strategic business planning and investments in technology. They also increased their focus on client satisfaction.

• Prioritization of investment performance continued it’s long decent and hit a new low of just 14% of firms including it in their top 5 priorities.

This chart shows the percentage of respondents selecting each initiative as top five for the year. * Please note that the dotted line represents an implied trend, as we do not have this data for 2018.Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

Firms prioritized transformative initiatives and client satisfaction; business development is still on top

Percentage of firms including in top five initiatives

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Perceived Effectiveness of Those Activities, Among Firms That Use Them

Percentage of firms using activity in 2020 Very Effective

Somewhat Effective

Not Effective

26% 69% 5%19% 68% 13%36% 61% 4%8% 64% 28%

15% 69% 16%33% 56% 11%52% 46% 2%10% 70% 20%11% 53% 36%23% 57% 20%18%* 55%* 27%*12%* 76%* 12%*

NA NA NA6%8%10%

21%23%24%

30%

45%57%59%

64%66%

75%

Purchased lists

Cold calling

Direct mail

PR

Traditional advertising

Online advertising

In-person events

Online events

Other digital marketing (excluding social media)

Social media

Networking

Collateral

Content marketing

Strategy and Growth: Business Development Activities

7

USAGE OF VARIOUS BUSINESS DEVELOPMENT ACTIVITIES

* Please note that effectiveness ratings for these activities reflect a small sample of firms, given the low usage of those activities.Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

Insights• A year of life in a pandemic brought about changes in how firms pursue new clients. Unsurprisingly, usage of activities such as online events and online advertising shot up, while

networking, in-person events, and traditional advertising dropped considerably.• Similarly, more firms now believe that each of these digital channels is at least somewhat effective; though, this experience has also further solidified the importance of traditional channels,

as we saw notable increases in the percentage of firms that believe that networking and in-person events are very effective.

Change Over Past Year

+1%

-7%-17%-1%

-3%+27%-34%+6%-9%-1%

-3%

+1%+1%

Usage of digital channels—as well as firm opinions of them—rose in 2020

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8

Outsourcing Practices by Business Function Insights• Each function is outsourced

by some firms, but there is a wide disparity in outsourcing practices for different functions. Firms are more likely to outsource in areas outside of their own expertise, such as legal, risk, compliance, and technology.

• However, we’ve also seen strong indications of interest in outsourcing investment management functions that are traditionally considered central to RIA value.

• Conversely, financial planning remains the function least likely to be outsourced.

• In a recent survey of advisors across all firm types (including but not limited to RIAs), we found that advisors who outsource reported higher growth, higher compensation, and fewer clients per advisor.

1%

6%

7%

6%

22%

40%

75%

4%

6%

11%

20%

19%

33%

38%

63%

45%

19%

94%

94%

88%

79%

72%

60%

55%

15%

14%

5%

Outsourced to Third PartyBothHandled InternallyDon't Know

Legal

IT/Tech/ Platform/ Cybersecurity

Compliance

Marketing/ Communications

Accounting & Fee Billing

HR/Training

Investment Mgmt. & Portfolio Construction

Business Strategy

Administrative Duties

Financial Planning

Outsourced NET

94%

86%

85%

45%

40%

25%

21%

12%

6%

5%

Currently using

Plan to decrease

usage

Plan to increase

usage

Managed Accounts 38% 8% 28%

Model Portfolios 26% 4% 50%

Direct Asset Manager Outsourcing 20% 6% 42%

Types of Investment Outsourcing Used

Outsourcing and GrowthDon't

outsource

Outsource 1–5

functions

Outsource 6+

functions

Percent reporting client/ household growth in past year 69% 77% 82%

Percent reporting asset growth in past year 84% 89% 94%

Past year organic AUM growth percentage (Mean) 6% 7% 9%

Past year compensation (Mean) $359K $355K $381K

Past year Individual/ HH Clients per advisor (Median) 160 150 140

Source: The 2021 Fidelity Financial Advisor Community—Outsourcing Survey. Advisor firm types included a mix of banks, IBDs, insurance, RBDs, RIAs, and wirehouse firms.


Outsourcing practices may be on the rise, and outcomes may rise with them Strategy and Growth: Outsourcing to Accelerate

Percentage of firms

Percentage of firmsPercentage of firms

Outsourced to Third Party Both

Handled Internally Don’t Know

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Client Demographics: Generational Wealth

9

PERCENTAGE OF FIRM CLIENTS AND AUM BY CLIENT AGE

% of clients

<30 years of age

30–39 years of age




70+ years of age

2% AUM4% Clients

Share of Wallet 80% 75% 75% 79% 80% 90%

4% AUM7% Clients

10% AUM13% Clients

23% AUM22% Clients

32% AUM28% Clients 30% AUM

25% Clients

● Bubble size reflects percentage of firm AUM by end-client age

Insights• This chart is largely unchanged from

prior years, with assets and professional investment advice still concentrated among older generations. Seventy-six percent of advisory clients are over the age of 50, and 85% of advised assets are attributable to those clients.

• While younger investors will seemingly move through this curve as they age, they may retain their current expectations of advisors. Our 2020 Investor Insights Study found that about 3 in 4 Gen YZ investors expect their advisor to engage next gen family members and provide more comprehensive services. Moreover, about 8 in 10 say they are likely to stay with their advisors and would like to consolidate more assets with them.

• Median share of wallet for all clients is 79%, and the distribution across age ranges falls consistently between 75%–80%, up until age 70, when it jumps up to 90%.


Although assets remain with older investors, engaging the next gen early may offer an advantage

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 1 2 3 4 5 6 7

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Number of Client Segments

Minimums for Assets or Fees

Bundling of Services in Core BPS Fee

Overall Fee (bps)

Offer and Pricing: Pricing Model Changes

10

Changing fees or pricing structure is a top-5 priority

9%Agree/strongly agree firm is receiving increasing pressure from clients to justify fees

2%Agree/strongly agree firm is receiving increasing pressure from prospects to justify fees

4%

CHANGES IN USAGE OF COMMON PRICING MODEL LEVERS

Made Over the Past 5 Years Expected Over the Next 5 Years

Insights• While we’ve seen a slight uptick in

the usage of each of these levers over the past year, our 5-year retrospective and prospective views remain largely unchanged.

• About a third of firms still expect increases in the usage and number of client segments, as well as the usage of asset or fee minimums, in the years to come.

• From 2015–2020, the percentage of firms that use client segments has increased from 31% to 39%, and their average number of segments has increased from 2.9 to 3.7 segments.

• Very few firms indicate increasing pressure to justify fees. Yet, this appears to be a rising concern versus just a year ago. We’ve also seen a fairly dramatic rise in discounting behavior over the last year, with 56% more discounters* and an increase in median discount to ~25 bps.

*Discounters are firms whose actual fee-based revenue is 10+ bps lower than revenue expected, based on their fee schedules. Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

Decreased or Eliminated

Increased or Added

No Change

Decrease or Eliminate

Increase or Add

No Change

2%

4%

1%

14%

75%

73%

86%

72%

23%

23%

13%

14%

1%

2%

3%

10%

63%

62%

83%

82%

36%

36%

14%

8%

5% 3% 6%

2019 2019 20192020 2020 2020

Firms have held off pricing model changes, in favor of ad hoc discounting and higher productivity

Percentage of firms

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2020 vs. 2016

% of firms offering

% of firms offering and including in

overall bps fee

% of end clients at firms offering the service who

receive it

-1% +3% -

+6% +7% +5%

+2% +4% +10%

+10% +9% +5%

+4% +7% -

- - -2%

-2% -1% -3%

+3% - -

+2% +1% -

NA* NA* NA*

- +2% -20%

Offer and Pricing: Service Offering, Bundling, and Usage

11

2020 SNAPSHOT

Insights• More firms are offering financial planning and philanthropic planning services, and more end clients are utilizing these services. • Firms seem to be more likely to bundle services under an overall bps fee, especially services such as financial, philanthropic, and estate planning.

* Please note that 2019 is the first year we asked about life planning/coaching services.Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

18%

18%

25%

27%

55%

58%

66%

69%

75%

96%

99%

40%

15%

10%

10%

10%

30%

50%

20%

70%

75%

100%

7%

14%

15%

16%

38%

36%

54%

59%

64%

78%

90%

Tax Preparation

Life Planning/Coaching Services

Trust Services

Concierge Services

Retirement Plan Servicing

Risk/Insurance Planning

Estate Planning

Philanthropic Planning

Tax Planning and Strategy

Financial Planning

Investment Management

Financial planning is finally table stakes, as firms include more services under their overall bps fee

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Offer and Pricing: Aligning Pricing and Value

12

Insights• The most common stated fee

for a $1M client is 100 bps, regardless of the number of bundled services that they offer for that fee.

• Further, there's no clear relationship between the number of bundled services a firm provides and the fees that they charge.

• The median minimum fee firms charge is $5,000, and 80% of clients pay at least that much.

• While we’ve seen an increase in discounting behavior over the last year, we have not seen a commensurate change in fee schedules.

0

50

100

150

200

250

0

2

4

6

8

10

12

Num

ber o

f Ser

vice

s Bu

ndle

d

Number of Services Bundled

Stated BPS Fee for Bundled Services

STATED BASIS POINT FEE FOR A $1M CLIENT, BY FIRM, BY NUMBER OF BUNDLED SERVICES


Stated BPS Fee for Bundled Services

Each column and marker represent the response of one firm in our study, arranged by number of bundled services.

Despite more discounting and bundled services, firms have left fee schedules unchanged

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Technology: Top Solutions

13

RIA Firm Use Top Three Most Frequently Used Providers In 2020

Technology Solution 2020 YoY Change 1st 2nd 3rd

Portfolio/Performance Reporting 98% -2% Tamarac Black Diamond Orion

Client Relationship Management (CRM) 94% +1% Redtail Salesforce Tamarac

Portfolio Modeling/Rebalancing/Trading 92% -1% Wealthscape Tamarac Orion

Billing 92% 0% Tamarac Orion Black Diamond

Online Client Portal 91% +6% eMoney Tamarac Black Diamond

Financial Planning 88% -1% eMoney Money Guide Pro Advicent/Naviplan/ RightCapital

Aggregation 88% +8% eMoney Black Diamond/ By All Accounts Orion

Compliance/Risk 82% +6% SMARSH Global Relay NRS

Document Management 80% +2% Sharefile Box Laserfiche/ Sharepoint

Workflow System 73% +8% Redtail Salesforce Tamarac

Proposal Generation 55% +13% Morningstar Riskalyze Envestnet

Digital/Robo Advice 16% +5% Schwab Institutional Intelligent Portfolios

Fidelity Automated Managed Platform (AMP)

Betterment/ Proprietary/Built internally

Insights• While the top three providers and their relative rankings do shift a little in some years, the top providers in each category have largely remained intact, year-over-year.• The impact of the pandemic experience can be seen in the rise in overall usage of solutions that enable a better client experience in a digital/remote-first environment, including: online

client portal, aggregation, compliance/risk, workflow, proposal generation, and digital advice solutions.

eMoney Advisor LLC is a Fidelity Investments company and an affiliate of Fidelity Brokerage Services LLC and National Financial Services LLC.Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

An increase in usage of key tech solutions brought little change to the market positions of top providersPercentage of firms

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Technology: Cybersecurity and Risk Management

14

93%Have Written Policies

and Procedures on Cyber Breach

89%Use Outside Compliance Consultants


Type of Insurance Used

97%

77%

62%

55%

E&O

Cyber

Bond

Director and Officers

Median Coverage Amount

$2.0M

$1.0M

$1.0M

$3.0M

Review Frequency of Risk Management Policies and Procedures

9%

19%

10%

45%

1%

16%

Monthly

Quarterly

Semiannually

Yearly

Every Couple of Years

As Needed

Review Frequency of Trading/Money Movement Policies and Procedures

4%

14%

4%

49%

1%

28%

Monthly

Quarterly

Semiannually

Yearly

Every Couple of Years

As Needed

Insights• With renewed focus

on cybersecurity in the remote-first environment, we’ve added new questions to our study, focused on this topic.

• We’ve found that, while most firms cover the basics in terms of maintaining cybersecurity training, written policies and procedures to respond to breaches, and cybersecurity insurance, quite a few firms don’t meet these minimums.

• Interestingly, 9 in 10 firms also hire outside compliance consultants.

With cybersecurity risks on the rise, opportunity remains for some firms to shore up their foundations

78%Have Cybersecurity

Training

Percentage of firms

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Technology: Tech Embracers


11.2%13.5%

9.6% 10.7%

2017 2020

3-year AUM CAGR (2017–2020)

9.4% 10.7%6.8%

10.1%

2017 2020

3-year Revenue CAGR (2017–2020)

6.7% 7.2%4.7% 5.2%

2017 2020

3-year Client CAGR (2017–2020)

Tech Embracers

Other Firms

Technology spends as % of revenue 3.1% 2.1%

Technology spends ($) $113K $61K

71% 77%

2017 2020

Insights• Since we introduced

this question in 2017, more firms are self-identifying as Tech Embracers.

• Firms that report embracing technology also spend more on technology. This is true both as a percentage of revenue and in total dollars.

• Tech Embracers are seeing results. These firms have maintained higher growth rates in terms of assets under management, overall revenue, and clients.

Firms That Indicate That They Embrace Technology

Technology Spending for Tech Embracers vs. Others

Growth Rates for Tech Embracers vs Others

More firms are embracing technology; those that do are growing faster

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Special Addendum on Firms with $1B+ in AUM

For institutional use.

0.57% 0.61%0.54%

$1,891$2,105

$2,903

2014 2017 2020

$8.9 $12.0 $13.0

0.76% 0.72% 0.67%

$148$201

$305

$1.2 $1.3$1.9

2014 2017 2020

Insights• Despite a decline in revenue yield, both $1B+ and < $1B firms saw revenue climb, as AUM continued to rise.• < $1B and $1B+ firms have both been able to lower their overall expenses over time.

36% 37% 35%

40% 41% 38%

1 2 3


17

$1B+ Firm Comparison: Assets, Revenue, and ExpensesEXPENSES (mean)ASSETS AND REVENUE (median)



2014 2017 2020


47% 43% 44%

37% 35% 30%

1 2 3


2014 2017 2020

$1B+

Firm

s<

$1B

Firm

s

$1B+

Firm

s<

$1B

Firm

s

12.7%3-year

revenue CAGR

14.5%3-year AUM

CAGR

9.8%3-year

revenue CAGR

12.3%3-year AUM

CAGR

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54% 55% 60%

17% 22% 26%

2014 2017 2020


18

$1B+ Firm Comparison: Profitability and ProductivityPROFITABILITY (mean) PRODUCTIVITY (median)


$2.8

M

$2.7

M $3.2

M

2014 2017 2020

70 72 74

2014 2017 2020

$201

M

$183

M

$250

M

2014 2017 2020

$1,0

13K

$966

K

$1,2

32K

2014 2017 2020

49% 46%52%

25% 22% 27%

2014 2017 2020




$0.9

M

$1.0

M

$1.5

M

2014 2017 2020

67 71

97

2014 2017 2020

$68M

$71M

$129

M

2014 2017 2020

$474

K

$487

K $756

K

2014 2017 2020

Insights• Thanks to revenue growth and expense reductions, < $1B and $1B+ firms have both seen a rise in profitability.• Productivity has continued to rise for < $1B and $1B+ firms alike, and both groups have seen these metrics spike in recent years.

$1B+

Firm

s<

$1B

Firm

s

$1B+

Firm

s<

$1B

Firm

s

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$1B+ Firm Comparison: Strategic Sentiment and Planning

19

We rely heavily on our founders or principals of the firm to drive growth

We have a clearly defined firm story that explains what differentiates us from other firms

We have a plan in place to establish relationships with the adult children of select clients

We have a clearly defined succession plan at our firm that is ready for implementation

We have next-gen leaders who are well-prepared to take over day-to-day management of the firm

In the next five years, we are likely to participate in M&A activity as a buyer

We are actively targeting younger investors to diversify our client base

Our firm uses metrics and KPIs effectively in managing the business

In the next five years, we are likely to participate in M&A activity as a seller

We are receiving increasing pressure from our prospects to justify our fees

We are receiving increasing pressure from our clients to justify our fees

Strategic Sentiments< $1B Firms

84%

63%

37%

34%

28%

23%

17%

16%

10%

5%

3%

50%

72%

42%

53%

42%

22%

11%

28%

6%

6%

0%

$2.5B+ Firms


44%

81%

40%

55%

50%

62%

19%

45%

12%

12%

5%

Insights• Where most firms with less than

$1B depend heavily on founders or principals to drive growth, $1B+ firms generally rely instead on a clearly defined firm story and differentiated value proposition in a decentralized distribution model. In addition, 2 in 5 $1B+ firms—and 1 in 2 $2.5B+ firms—have a business development officer.

• $1B+ firms are also more likely than their smaller counterparts to use metrics/KPIs to manage the business and to have clear, implementation-ready succession plans.

• Firms of all sizes are relatively unfocused on younger investors and relationships with adult children of select clients.

• $2.5B+ firms are ~3X more likely to be buyers in the M&A market over the next 5 years.

$1B–$2.49B Firms

Distribution models and strategic plans can differ quite a bit between firms of different sizes

(Rated 6/7 on 7-pt agreement scale)

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CHANGE OVER PAST YEAR

-8%

-20%

-2%

-5%

-10%

+45%

-53%

-25%

+6%

0%

+3%

-4%

+7%


+5%

-3%

-6%

+3%

+14%

+31%

-33%

0%

+14%

-3%

-3%

-8%

0%

86%

71%

95%

71%

69%

81%

38%

17%

36%

45%

12%

5%

19%

86%

78%

86%

75%

67%

56%

31%

39%

33%

25%

11%

3%

6%


+2%

-21%

-10%

-1%

-7%

+22%

-28%

-7%

+3%

-1%

-4%

+4%

-2%

$1B+ Firm Comparison: Business Development Activities

20

Business Development Activities


Content marketing

Networking

Collateral

Social media

Other digital marketing (excluding social media)

Online events

In-person events

Traditional advertising

Online advertising

PR

Direct mail

Purchased lists

Cold calling

< $1B Firms

68%

58%

51%

51%

50%

32%

28%

20%

17%

13%

10%

7%

5%

$1B–$2.49B Firms $2.5B+ FirmsInsights• Overall, $1B+ firms were

more likely to engage in every business development activity. About 7 in 10 $1B+ firms spent time and resources networking, on social media, conducting other digital marketing, and hosting online events. By contrast, only about half of firms < $1B followed suit. Content marketing and collateral are other areas of advantage for $1B+ firms.

• $1B+ firms also responded better to the pandemic, increasing usage of online events and online advertising. This is especially pronounced for the $2.5B+ firms: 8 in 10 used online events this year. That’s more than double the previous year.

Larger firms have more robust business development programs and were more agile in the pandemic

Percentage of firms

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$1B+ Firm Comparison: Client Acquisition Summary

21

25% 22% 30% 30%

20%16%

23% 32%

55% 61%47% 39%

All other new clients(including business

development, clients gained from hiring advisors, and M&A)

Referred by third-party

Referred by clients

% of New Clients % of New AUM from New Clients

All Firms $1B–$2.49B Firms

(Mean figures)

< $1B Firms

(Median figures) All Firms < $1B Firms $1B-$2.49B Firms $2.5B+ Firms

% of clients who made any referrals 5% 5% 5% 6%

% of COIs who made any referrals 10% 10% 10% 10%

Closing ratio (% of prospects that become clients) 70% 75% 51% 55%

% of new clients closed in two or fewer meetings 75% 90% 50% 50%


Insights• Firms of all sizes were more

dependent on client referrals than in previous years, though $1B+ firms have a healthier mix of sources, with more than half of new clients and assets from third-party referrals, business development work, and other acquisition activities. $2.5B+ firms are approaching an equal distribution across these 3 sources.

• Overall, most new clients and assets were from client referrals, and all referrals originated with just 5% of clients. This demonstrates the importance of client experience and cultivating promoters within your client base.

• Smaller firms close a much higher percentage of prospects than larger firms, and they are far more likely to do so in two or fewer meetings. While this may reflect bigger business development programs and more overall prospects at larger firms, there are likely also some lessons to learn from smaller firms.

25% 23% 29% 28%

21%16%

26% 33%

54% 61%44% 39%

$2.5B+ Firms

All Firms $1B–$2.49B Firms

< $1B Firms

$2.5B+ Firms

As firms grow larger, they tend to be less reliant on client referrals to drive new business

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Appendix

For institutional use.

Financial Metrics by Firm Size

23

1 Median.2 Mean.NA: Data unavailable due to insufficient sample.* Caution: Based on small sample.Source: 2021 Fidelity RIA Benchmarking Study. For institutional use.

Metric All FirmsFirms by Total AUM Ranges

<$100M $100M–$249M $250M–$499M $500M–$999M $1B+

Number of Clients1 354 NA 175 167 526 951

Assets Under Management (Millions)1 $606 $79* $166 $344 $719 $2,903

Total Revenue (Thousands)1 $3,286 NA $1,111* $1,992 $4,700 $13,022

Revenue Yield (Basis Points)1 61 NA 71* 63 68 54

Marketing and Business Development Expense (Thousands)2 $41 NA $15* $22 $57* $166

Marketing and Business Development Expense (% of Revenue)2 1.2% NA 1.4%* 1.1% 1.2%* 1.3%

Earnings BeforeOwners’ Compensation (EBOC) (Thousands)2 $1,875 NA $586* $1,237 $2,706* $6,835

EBOC Margin2 57% NA 53%* 62% 58%* 52%

Number of FTEs1 9.0 2.0* 4.0 6.0 10.5 32.0

% of Total FTEs Who Are Female 40% 23%* 41% 38% 39% 44%

Number of Owners1 2.0 1.0* 1.0 2.0 3.0 6.0

% of Individual Owners Actively Working at the Firm Who Are Female 17% 11%* 23% 20% 8% 20%

Revenue per Client1 $10,086 NA $6,448* $10,542 $8,817* $16,582

Total Clients per Advisor1 89 NA 100* 88 118 74

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The 2021 Fidelity RIA Benchmarking Study was conducted between March 26 and May 26, 2021; 211 firms participated. The 2020 Fidelity RIA Benchmarking Study was conducted between March 10 and May 20, 2020; 188 firms participated. The 2018 Fidelity RIA Benchmarking Study was conducted between July 24 and September 24, 2018; 355 firms participated. The 2017 Fidelity RIA Benchmarking Study was conducted between April 19 and June 6, 2017; 408 firms participated. The 2016 Fidelity RIA Benchmarking Study was conducted between April 27 and June 16, 2016; 402 firms participated. The 2015 Fidelity RIA Benchmarking Study was conducted between April 21 and June 15, 2015; 441 firms participated. The 2014 Fidelity RIA Benchmarking Study was conducted between May 6 and June 30, 2014; 411 firms participated. The 2013 All benchmarking studies were conducted in collaboration with independent third-party research firms unaffiliated with Fidelity Investments. The experiences of the RIAs who responded to these studies may not be representative of the experiences of other RIAs and are not an indication of future success. Registering for, completing, and accessing these studies required access to and use of third-party websites, operated by independent third-party research firms unaffiliated with Fidelity Investments.The 2021 Fidelity Financial Advisor Community—Outsourcing Survey was an online blind survey (Fidelity not identified) and was fielded during the period April 21 through April 30, 2021. Participants included 451 advisors who manage or advise upon client assets either individually or as a team, and work primarily with individual investors. Advisor firm types included a mix of banks, independent broker-dealers, insurance companies, regional broker-dealers, RIAs, and national brokerage firms (commonly referred to as wirehouses), with findings weighted to reflect industry composition. The study was conducted by an independent firm not affiliated with Fidelity Investments. The 2020 Fidelity Investor Insights Study was conducted during the period October 15 through October 24, 2020. It surveyed a total of 1,181 investors, including 560 millionaires. The study was conducted via a 25-minute online survey, with the sample provided by Brookmark, a third-party firm not affiliated with Fidelity. Respondents were screened for a minimum level of investable assets (excluding retirement assets and primary residence), age, and income levels.

For investment professional use. Not authorized for distribution to the public as sales material in any form.Third-party trademarks and service marks are the property of their respective owners; all other trademarks and service marks are the property of FMR LLC.Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as the primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.For more information, please contact your Home Office or Fidelity Relationship Manager. The information provided herein is general in nature and should not be construed as legal advice or opinions. You should always consult your legal counsel to assist you with any questions you may have or with specific situations that apply to you.Fidelity InstitutionalSM provides investment products through Fidelity Distributors Company LLC; clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC (Members NYSE, SIPC); and institutional advisory services through Fidelity Institutional Wealth Adviser LLC. Personal and workplace investment products are provided by Fidelity Brokerage Services LLC, Member NYSE, SIPC. Institutional asset management is provided by FIAM LLC and Fidelity Institutional Asset Management Trust Company.© 2021 FMR LLC. All rights reserved.

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The 2021 Fidelity RIA Benchmarking Study

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