Parting Shot continued from page 72
really fast ? Heavyweights grew at a median rate of 22 %, the same rate as their cruiserweight counterparts and faster than the middleweights ( who grew at 20 %). The math suggests that we should be seeing the opposite phenomenon — that the smaller denominator should make it easier for smaller firms to grow at a faster rate . ( See Figure 2 .)
Clearly acquisitions , combined with bigger marketing budgets , larger reputations and more business developers , create an advantage for the largest firms .
If You Want Larger Clients , Be A Larger Firm
Most advisory firms are looking to increase the amount in assets they have per client . Bigger clients promise more profitability , which also gets firms a reputation for the sophistication of their services . It seems from our data that if you want bigger client relationships , you should strive to make your firm larger . The top 100 firms clearly demonstrate that .
The heavyweights have an average assets under management per client of $ 5,608,823 while the cruiserweights have $ 3,181,414 and the middleweights have $ 1,687,614 .
The clients with the most assets frequently prefer the richer resources of bigger firms . ( See Figure 3 .)
If You Want To Grow Faster , Consider Smaller Clients While firms usually want bigger clients , they should consider smaller relationships , too , as a way of accelerating their growth . If we categorize firms according to their average client size , we see that the smaller the target client size , the faster the actual growth .
Those firms whose clients had more than $ 50 million in assets under man-
It seems from our data that if you want bigger client relationships , you should strive to make your firm larger . The top 100 firms clearly demonstrate that . figure 1
Mergers And Acquisitions As The Top Growth Contributor
20 %
15 %
18 %
10 % |
|
|
|
5 % |
|
8 % |
6 % |
0 % |
top 100 |
100 to 200 |
200 to 500 |
|
figure 2
Rate Of AUM Growth And Percent Of Firms In The Group Outperforming The S & P 500
■ aum growth
■ Percent of firms outperforming the s & P
40 %
30 %
20 %
10 %
22 %
37 %
22 %
29 %
20 %
27 %
|
figure 3
Median Size Of Client Relationships
$ 6,000,000
$ 5,000,000
$ 4,000,000
$ 3,000,000
$ 2,000,000
$ 1,000,000
$ 5,680,823
$ 3,181,414
|
$ 1,687,614 |
figure 4
AUM Growth Rate 2021 By Average AUM Per Client Served
25 %
20 %
15 %
10 %
5 %
16 %
17 %
19 %
21 %
23 %
|
0 % |
top 100 |
100 to 200 |
200 to 500 |
$ 0 |
top 100 |
100 to 200 |
200 to 500 |
0 % |
> $ 50m |
$ 10-50m |
$ 5-10m |
$ 1-10m |
< $ 1m |
70 | financial advisor magazine | july / august 2022 www . fa-mag . com