In a startling revelation from the 2023 Fidelity RIA Benchmarking study, net new assets from both new and existing clients took a nosedive, plummeting by a staggering 40% year-over-year.
This startling decline rippled across RIA firms of all sizes, shaking the industry that had enjoyed a pandemic-fueled record year. Advisors grappled with market volatility and a return to normalcy, causing smaller firms managing under $1 billion in assets to witness their growth rate drop from 8.2% to a mere 3.2%. Larger firms didn’t escape unscathed, experiencing a decline from 8.4% to 3.6%.
The study’s findings shed light on the primary culprit behind this alarming downturn – a 40% decline in inflows from new and existing clients. Notably, advisors adapted by taking on more clients who brought fewer assets to the table.
Carina Diamond, the CEO and founder of Stella Secunda, weighed in. She pointed out that these low organic growth rates might be a direct result of market volatility as advisors shifted their focus toward client retention.
She said, “There is probably some normalization going on when people talk about growth; a lot of times historically, they’ve counted in the market. When you strip out the market, this is when you see these low single-digit numbers.”
