Charles Schwab Corporation (the) · NYSE:SCHW
Charles Schwab Corporation (the) — Investor Presentation (2024)
47 slides from Charles Schwab Corporation (the)'s investor presentation, 2024
Slide 1: Insights from the 2024 RIA Benchmarking Study
Insights from the 2024 RIA Benchmarking Study Classification: Schwab Internal
Slide 2: About the 2024 RIA Benchmarking Study
About the 2024 RIA Benchmarking Study Schwab’s RIA Benchmarking Study is the leading study in the industry— 1,304 advisory firms, representing $2 trillion in AUM, participated in the 2024 study. 2024 marked the 18th year The results in this report “As RIAs seek to grow, many are achieving success by
Slide 3: 2024 study highlights
2024 study highlights Firms continued focus on growth strategies led to strong performance in 2023 • Robust gains were a highlight for Registered Investment Advisor (RIA) firms—AUM increased 17.9% for the median firm, a significant rebound from 2022. The trusted relationship between advisors and the
Slide 4: Effective planning and execution is a leading indicator of success
Effective planning and execution Value is defined through your Operational excellence creates Your reputation is your brand People are your most important is a leading indicator of success clients’ eyes greater capacity for clients asset Growing your firm requires focus, Firms thrive when focusing o
Slide 5: The Firm Performance Index identifies Top Performing Firms
The Firm Performance Index identifies Top Performing Firms and helps advisors pinpoint strengths and opportunities. The Firm Performance Index ranks all firms on 15 metrics Firm performance Activities implemented that align with the Guiding ▪ 5-year client CAGR ▪ Standardized workflows in CRM Princi
Slide 6: The RIA industry continues to demonstrate strong long-term results
The RIA industry continues to demonstrate strong long-term results. Assets under management Revenue Clients In millions In thousands $542 $3,264 350 275 $2,193 $293 +17.9% +6.3% +4.3% in 2023 in 2023 in 2023 +13.4% CAGR1 +10.0% CAGR1 +6.2% CAGR1 2018 2023 2018 2023 2018 2023 1 Median 5-year compound
Slide 7: Top Performing Firms demonstrate more robust growth than all other firms
Top Performing Firms demonstrate more robust growth than all other firms. Median AUM Growth Top Performing Firms All other firms 29.2% Top Performing Firms 23.9% vs all other firms 29.9% 21.7% 5-year CAGR: AUM 1.8x 20.6% 19.7% Revenue 2.1x 14.1% 16.1% Clients 2.7x -2.5% Net asset flows 2.7x -8.3% 20
Slide 8: The 5-year CAGRs for Top Performing Firms indicate successful long-term strategies
The 5-year CAGRs for Top Performing Firms indicate successful long-term strategies. Top Performing All other firms Multiple Firms 5-year net asset flows CAGR 15.3% 5.8% 2.6x 5-year revenue CAGR 17.6% 8.3% 2.1x 5-year client CAGR 12.6% 4.6% 2.7x Number of new clients in 2023 42 23 1.8x Assets from ne
Slide 9: Client acquisition and talent-focused initiatives continue to be top priorities
Client acquisition and talent-focused initiatives continue to be top priorities. Rank Top strategic initiatives 2024 2023 2022 2021 Acquire new clients through client referrals 1 1 2 1 Acquire new clients through business referrals 2 3 3 4 Recruit staff to increase firm's skill set/capacity 3 2 1 2
Slide 10: Organic growth was integral to gains seen in 2023
Organic growth was integral to gains seen in 2023, as firms’ value propositions continued to attract investors. Contribution of net organic asset growth to AUM growth Net organic growth AUM growth 29.2% 23.9% 21.5% 21.7% 21.7% 19.4% 17.1% 17.4% 16.4% 15.4% 12.3% 12.2% 9.2% 8.4% 9.0% 7.7% 7.9% 5.2% 5
Slide 11: Assets from existing clients were strong in 2023
Assets from existing clients were strong in 2023, especially for Top Performing Firms. Assets from existing clients (excluding investment performance) In millions +7% $3.0 $17.6 $18.0 $2.8 $16.8 Top Performing Firms gained 4.5x more $1.7 assets from existing $10.0 $10.0 $9.2 $9.1 clients than all ot
Slide 12: Client retention has remained at 97% for the last decade
Client retention has remained at 97% for the last decade—a testament to the RIA industry. 97% 2013 2018 2023 Client retention for firms across the study Median results from the 2014-2024 RIA Benchmarking Study from Charles Schwab for all firms with $25 million or more in AUM. Past performance is not
Slide 13: An intentional plan to collect client feedback can support efforts to increase assets
An intentional plan to collect client feedback can support efforts to increase assets from existing clients. Top channels used to capture client feedback Top Performing Firms All other firms 43% 37% 33% 30% 22% Firms that collect feedback during interviews with clients 16% gained 26% more assets fro
Slide 14: Firms offer services to meet ideal client needs
Firms offer services to meet ideal client needs, typically including them as part of the fee. Personalizing services can help deepen relationships. 95% 88% 85% Included in asset management fee 74% 83% 89% 69% 83% 88% Firms offering service 50% 79% 42% 39% 37% 86% 87% 80% 68% Financial Charitable Tax
Slide 15: Firms continued their culture of new client growth in 2023
Firms continued their culture of new client growth in 2023, achieving five-year highs for all firms. Assets from new clients In millions +13% $43.1 $38.0 $35.0 $35.8 Top Performing $30.6 $31.5 Firms gained $5.0 $5.0 $5.1 $25.0 $24.0 2.4x more $4.0 $4.0 $23.2 $22.0 assets from new clients than all ot
Slide 16: Firms achieved their new client growth goals in 2023
Firms achieved their new client growth goals in 2023. 74% 53% of all firms in the study of Top Performing Firms met or exceeded their new client growth goals met or exceeded their new client growth goals Top Performing Firms are those that rank in the top 20% of the Firm Performance Index. The index
Slide 17: Top Performing Firms' strong new client acquisition results were driven by marketing and referrals
Top Performing Firms’ strong new client acquisition results were driven by marketing and client referrals. 8.1% 0.7% 2.5% 2.1x more growth Asset growth in 2023 1.1% Inorganic activity 3.9% from new clients by Other marketing 0.2% source COI/business partner referrals 3.7% 0.9% Existing client referr
Slide 18: Strategic and succession plans support firm performance and endurance
Strategic and succession plans support firm performance and endurance. Firms with written strategic plans Firms with written succession plans 82% 75% 68% 64% 52% 44% Firms under $250M Firms over $250M Top Performing Firms Firms under $250M Firms over $250M Top Performing Firms Top Performing Firms a
Slide 19: Documenting an ideal client persona and client value proposition
Documenting an ideal client persona and client value proposition helps firms define their CX and support new client growth. Top Performing Firms 82% Firms with a documented ideal client persona/profile (ICP) Firms over $250M 71% Firms under $250M 56% Top Performing Firms 86% Firms with a documented
Slide 20: An integrated marketing plan is essential for growth
An integrated marketing plan covering all activities that reach prospects and clients is essential for growth. Top Performing Firms 58% Firms with a documented marketing plan Firms over $250M 52% Firms under $250M 30% Top Performing Firms 2.5% Average marketing and business development spend Firms o
Slide 21: Firms with written marketing plans attracted more new clients and assets
Firms with written marketing plans, ideal client personas, and client value propositions attracted more new clients and assets. 67% More new clients 67% More new client in 2023 assets in 2023 Median results for all firms with $25 million or more in AUM. Past performance is not an indicator of future
Slide 22: Referrals are still the backbone of organic growth
Referrals are still the backbone of organic growth, yet fewer than half of firms document referral plans. Top Performing Firms 51% Firms with a documented referral plan for existing clients Firms over $250M 41% Firms under $250M 30% Top Performing Firms 34% Firms with a documented referral Firms ove
Slide 23: Firms with referral plans achieved stronger results
Firms with referral plans achieved stronger results from those channels in 2023 than firms without referral plans. Firms with existing client referral plans Firms with business partner referral plans 1.4x 3.0x more new clients more new clients generated from existing generated from business client r
Slide 24: Firms can amplify their client referral network by leveraging key tactics
Firms can amplify their client referral network by leveraging key tactics. Tactics used to support client referral strategy The median firm Top Performing Firms reported that 5% All other firms of clients made a powerful trio 80% referrals in 2023.1 76% 63% 59% 56% 51% 47% 43% 38% 38% 36% 35% 23% 14
Slide 25: Identify COIs that are a good fit and focus on those relationships
Because partnerships take time to develop, it is important to identify COIs that are a good fit and focus on those relationships. Tactics used to support COI referral strategy Top Performing Firms The median firm in the study All other firms worked with a COI for 1 year before receiving a qualified
Slide 26: Digital marketing tactics were effective at generating leads
Digital marketing tactics were effective at generating leads. Across the study, 13% of firms reported using AI to develop 85% digital marketing content. 73% 71% 66% 62% 59% 52% Firms generated leads from tactic in 20231 Firms used tactic in 2023 24% 39% 15% 54% 35% 47% 76% Online Webcasts/ Podcasts
Slide 27: An effective website needs to be engaging and easily found
An effective website needs to be engaging, provide content that appeals to the firm’s ideal client, and be easily found. Content designed for firm’s ideal client persona 52% Search engine optimization (SEO) 50% Lead capture form 48% Website metrics and analytics 48% Social media buttons on website 4
Slide 28: Tracking prospecting results helps ensure effective use of marketing resources
Tracking prospecting results and refining tactics help ensure the effective use of marketing resources. Elements tracked to measure progress toward new client goals Top Performing Firms All other firms 80% 65% 68% 55% 66% 46% 62% 44% 47% 50% of leads closed in 20231 30% 25% 16% Source of General inq
Slide 29: More than 40% of firms have pursued inorganic strategies
More than 40% of firms have pursued inorganic strategies over the past five years. 19%have engaged in M&A in of firms 5-year CAGR Firms with inorganic activity Firms without inorganic activity Multiple the past 5 years. AUM 14.9% 12.6% 1.2x 12.0% 9.0% 1.3x 23% of firms Revenue have had an advisor wi
Slide 30: Half of all firms are seeking inorganic growth opportunities
Looking ahead, half of all firms in the study are seeking inorganic growth opportunities. Firms over $250M 26% Firms actively seeking to buy another RIA Firms over $1B 36% Firms over $250M 44% Firms actively seeking to bring on an advisor with a book of business Firms over $1B 56% Firms over $250M 1
Slide 31: Top reasons for pursuing inorganic strategies
Firms pursuing inorganic strategies said their top reasons for doing so were to increase growth, acquire talent, and create scale. Increase AUM, revenue, and client growth 91% Acquire talent 64% Create scale 57% Improve client experience 50% Enhance operational efficiency 42% Provide a succession so
Slide 32: A client segmentation strategy can help firms manage profitability
A client segmentation strategy can help firms manage profitability, especially when serving various client groups. 58% Firms with a client 50% segmentation strategy A segmentation strategy defines 34% the client experience and how it’s delivered consistently and efficiently among each segment of cli
Slide 33: Aligning revenue with cost to serve clients
Aligning revenue with cost to serve clients is essential to building a profitable business. Percent of clients in 2023 by relationship size 55% 18% 16% 6% 5% Estimated percent of revenue in 2023 by relationship size 21% 16% 25% 13% 25% Less than $1M $1M-$2M $2M-5M $5M-$10M Over $10M Results for all
Slide 34: Segmentation strategy for the next generation of clients
When pursuing the next generation of clients, a segmentation strategy can be beneficial. Client distribution by client age Asset distribution by client age 2% 4% Top strategies to pursue the next generation of clients: 5% 8% 30% 9% Engaging with clients’ children (66% of firms) 35% 12% 25% …represen
Slide 35: Over the past five years, most firms have hired talent
Over the past five years, most firms have hired talent. Firms that hired 75% 71% 78% 77% 73% 2019 2020 2021 2022 2023 Median firm hired 2 staff for new roles added in 2023. Top recruiting channels used: Personal + professional networks 55% of firms Colleges/universities 36% RIAs 32% Non-financial pr
Slide 36: Adding talent continues to be a focus for most firms
Adding talent continues to be a focus for most firms. Over the next five years, Firms that plan to hire in 20241 Median firm will need to hire 4 new roles Median Top Performing Firm will need to hire 7 new roles 73% Based on current growth rates and the number of RIAs, the industry will need to hire
Slide 37: Firms are looking internally to develop their employees
Based on the demand for talent, firms are looking internally to develop their employees. #5 developing staff capabilities/skills 76% of firms 39% of firms ranks as top 5 strategic offer a career path/ promoted staff in 2023. priority for first time in progression opportunities. study tenure. Results
Slide 38: An employee value proposition is essential to attract and retain talent
An employee value proposition (EVP) is essential to attract and retain talent. 60% Firms with a documented 51% employee value proposition An EVP is a set of offerings the firm provides to staff in return for the skills and 25% experiences employees bring to the firm. Firms under $250M Firms over $25
Slide 39: Elements in an EVP need to resonate with employees
Elements in an EVP need to resonate with the firm’s current and prospective employees. Elements firms include in their employee value proposition Top Performing Firms All other firms 90% 90% 89% 86% 80% 79% 80% 80% 76% 73% 68% 70% 68% 66% 65% 57% 58% 58% 46% 41% Compelling Emphasis Financial Defined
Slide 40: Minimizing staff attrition helps ensure a firm's stability
Minimizing staff attrition helps ensure a firm’s stability. Top Performing Firms 50% Firms with staff departures Firms over $250M 62% Firms under $250M 30% Top Performing Firms 1.6% Median staff attrition rate Firms over $250M 6.9% Firms under $250M 0.0% Top Performing Firms are those that rank in t
Slide 41: Strategies to create efficiencies have led to productivity gains
Strategies to create efficiencies have led to productivity gains. 2023 $108 AUM per professional ($M) 2019 $99 2023 61 Clients per professional 2019 53 2023 29 Annual hours per client for Top Performing Firms spent client service around 25% less time annually 2019 34 per client on operations (11 hou
Slide 42: Technology is essential for client connections and operations
Technology is essential for client connections and operations. 2020 Technology systems selected as having 2024 greatest impact or ROI 99% 99% 95% 97% 93% 87% 89% 87% 83% 80% Firms using 76% technology systems 61% Portfolio Client relationship Financial planning Portal to Trading and Document managem
Slide 43: Top Performing Firms more often use their CRM as the central hub
Top Performing Firms more often use their CRM as the central hub to serve clients more consistently. Firms with three or more data sources Firms with standardized workflows or systems integrated with CRM within CRM for over 50% of tasks 63% 55% 51% 47% 48% 42% 38% 37% 38% 35% 32% 26% 2020 2024 2020
Slide 44: Digital processes can help drive operational efficiencies
Digital processes can help drive operational efficiencies and create capacity. Firms that use digital processes and workflows Top Performing Firms Nearly half of all firms in the All other firms study increased their use of digital workflows in 2023.1 100% 99% 97% 97% 97% 94% 91% 89% 88% 89% 84% 76%
Slide 45: Digital client onboarding helps reduce fraud and rework
By improving security, consistency, and efficiency, digital client onboarding helps reduce fraud and rework. Firms that use digital client onboarding workflows Top Performing Firms All other firms 98% 95% 93% 92% 89% 89% 83% 81% 80% 79% 73% 69% 66% 60% 41% 28% Account Account General Client Financia
Slide 46: A strong cybersecurity program is essential to help mitigate risk
A strong cybersecurity program is essential to help mitigate risk. Employee training 97% Email encryption or secure client portal 92% Cybersecurity insurance 91% Firms with cybersecurity activity implemented Written cyber policy and procedures 67% Cybersecurity consultant hired 63% Client education
Slide 47: Methodology and disclosures
Methodology and disclosures For general informational and educational purposes only. This report was produced by Charles Schwab & Co., Inc. and is intended for independent investment advisory firms. The report is intended for informational and educational purposes only, and is not intended to provid