Forget $100m – Benchmark of success rises for advisors

If an American advisor needs $1B in AUM to be considered “successful,” what must a Canadian professional have?

Forget $100m – Benchmark of success rises for advisors
Some advisors are constantly growing their books but even those ambitious individuals have a number in mind that says they’ve made it.

“Many RIA principals are focused on a supposedly magic benchmark: $1 billion in AUM,” said Matt Cooper, the president of California RIA Beacon Pointe Advisors in a recent guest piece for Financial Planning magazine. “To me, it all sounds a little too familiar. Back in 2000, though, the magic number was $100 million: An RIA with $100 million in AUM was considered large and successful.”

That’s south of the border where the market is 10 times larger. By inference the number here in Canada would be $100 million.

“There are higher and lower numbers that certain people use,” says Burgeonvest Bick portfolio manager John DeGoey. “That remains the most common number [$100 million] that I’ve heard people bandy about in terms of growth. If I ever get to that number they say, ‘I can feel as though I’ve made to the point where I don’t have to worry anymore.’”

A few years ago DeGoey set a 50/50 goal where he hoped to reach $50 million by age 50. He met that goal and now is on target to hit $100 million by age 55.

However, just because an arbitrary number is set in an advisor’s head, that doesn’t mean they spend a lot of time daydreaming about it.

“While it is interesting that the industry may utilize an AUM figure as a rule of thumb, I think there are better questions to ask,” says Northland Wealth Management CEO Arthur Salzer. “The goal should be to build a world-class wealth manager and AUM will follow.”

If an advisor puts their client’s interests first by doing the work necessary to ensure their mutually agreed upon goals are being met, etc., with little regard to AUM or revenue generated, in the long run the advisor’s book of business will be that much stronger.

“If you keep an eye on your clients and you look after your clients than your reputation as a person who does that will grow,” says DeGoey. “If you’re worried about where you’re going to land the next big client and you’re not looking after the clients you already have, you’re missing the point.” 

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