EAGAN, MN. August 22, 2022.

According to recent research from Panoramix, RIA revenues are down across the board nearly 16% (15.88) industry-wide in 2022. And with RIA firm mean operating margins at 26% (see here), profitability for what once was a high-margin industry is now being challenged. Many are now operating at a loss, particularly for firms that have high overhead structures and who have not embraced technology to drive efficiency and productivity.

Year Quarter YTD Net AUM Change YTD Revenue Change   2020 Q1 -14.43% -14.25%   2020 Q2 -3.42% -3.37%   2020 Q3 2.09% 2.06%   2020 Q4 12.63% 12.44%   2021 Q1 4.11% 4.05%   2021 Q2 9.53% 9.40%   2021 Q3 8.36% 8.24%   2021 Q4 14.81% 14.60%   2022 Q1 -4.77% -4.70%   2022 Q2 -16.13% -15.88%

As a result, advisory firm owners now more than ever need to take a hard look at their overhead and expenses to try and regain their lost business income and better rationalize their P&L statements.

One core area that leading firms are examining are the skyrocketing costs for their portfolio management, reporting and billing systems. Due to feature creep, acquisitions and constant bolting on of rarely used functionality, the big industry platforms can easily run north of 6 figures every year.

The good news for RIA firms, however, is that there are alternative solutions that cost much less, saving firms 70-80% a year on their total cost of ownership. Those savings are then translated into incremental business income that can more than make up for the revenue give backs due to market fluctuations.

Going forward, no one is sure of the length of the current bear markets, nor how deep they have yet to fall. As the Fed tries to tame inflation, more interest rate hikes may be on the horizon.

Accordingly, for RIA firms, now is the time to take a look at ways to shore up their overhead and operating expenses to insulate their firms for potential revenue declines, as well as find ways to be more efficient and productive to create that capacity and scale to continue to onboard new clients as the demand for fiduciary advice increases.

At Panoramix, we provide the best value in the industry by focusing on keeping our costs low, while providing extensive functionality and a commitment to customer service. Panoramix has consistently been ranked number 1 in customer service year over year by the T3 Advisor Technology study. As you start your business planning for next year, take a look at ways you can streamline your overhead and technology expenses. Panoramix will help you can regain your profitability through our cost-effective solutions.