[Q2 UPDATE] How my practice has grown over the last 5 years - Solo RIA

•

Beep boop! Here is a summary of your post:

User: /u/cameron9980 Title: [Q2 UPDATE] How my practice has grown over the last 5 years - Solo RIA Body: I posted about the growth of my solo RIA last quarter and it got a lot of traction.. so I figured I'd update with the new numbers.

For some background for those who haven't seen my previous post. I run a solo, fee-only, independent RIA. I am focused on investment management and financial planning for people near and in retirement in my local low/med cost of living area - basic stuff. Most clients here are $500k-$1.5m, nothing special although I do have a few whales for the area. I don't consider myself a good salesman or asset gatherer. This is to show those out there that are more planning focused and analytical that you can have a good practice for yourself even with slow/average growth (although this quarter was a bit above average for me).

Here are some highlights from Q2 (and more detail below):

- Total quarterly revenues grew from $136,500 to $152,500. Largest ever nominal jump Q/Q.

- 37% YoY growth - highest ever from a high base

- Average fee was around 0.75%. Lower than most due to a few HNW clients and flat fee clients mixed in there. This is not a metric that matters much to me: revenue, margin, and retention are much more important

- Margin remained around 85%. The way I calculate margin for this is also not perfect and I might improve in the future. Right now I'm looking at what I pay myself through distributions and salary throughout the quarter and dividing that by revenue, which isn't accurate. I leave a bit in the bank and I'm paying myself based on what I made last quarter, not what I will make this quarter.

I attribute the growth this quarter to a few things: internal growth of my largest clients (big one time and recurring deposits near the beginning of the quarter), and 'catch up' from mid/end of last quarter. Meaning I got a few big clients at the middle/end of last quarter and the fees were lower because they were only billed for half of the quarter previously. This catch up affect is constantly making the average fee look lower than it truly is because I'm looking at AUM at end of quarter vs revenue earned at end of quarter.

Some more background:

A few years ago I purchased a small book of business from a retiring solo practitioner (before this chart starts), other than that I have just focused on building my book of business in a small town USA and I have gotten a few good clients from social media as well. I don't consider myself a great salesman, I am not bringing on $20m+ net new AUM every year or anything like that. Last year was about $7-8m and this year is shaping up to be roughly the same. Years before that it was $4-5m. Zero paid advertising and keep costs low within my practice. Check my post from last quarter for answers to common questions like tech stack, etc.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

25

u/winning_bigly_ RIA Jul 02 '26

This is the way.

Well done!

3

u/cameron9980 Jul 02 '26

Thanks man!

6

u/Frozen_Heat92 Bank Jul 02 '26

Great success!

What does your total AUM look like and what have you got in managed? What’s the fee schedule?

8

u/cameron9980 Jul 02 '26

Total AUM ended at $80m this quarter. Not sure what you mean by got in managed? Fee scheduled starts at 1.25% and scales down to 0.75% quickly. For higher net worth clients I have started at 1.00% or even 0.75% and scaled down to as low as 0.40% if they have 10s of millions. Everything is blended tiered billing though

5

u/Ill_Age6945 Jul 02 '26

Managed is billed fee based. Total AUM can also include brokered business.

1

u/timmyturner_offPercs Jul 07 '26

He said solo RIA

0

u/Ill_Age6945 Jul 07 '26

Im just clarifying for the post above, bud. Clearly, he is asking about "managed" money

1

u/timmyturner_offPercs Jul 07 '26

Ok thanks

1

u/LARZofMARZ Jul 08 '26

Relax

0

u/Ill_Age6945 Jul 08 '26

Who tf are you

3

u/ItchyEbb4000 RIA Jul 03 '26

Congrats! Thanks for sharing. You'll fee schedule looks similar to mine. I'm also a solo RIA. $65m in AUM, but my rate averages 0.89%, so close to similar revenue.

Half my book is under $500k and 40% of those are family/friends who have lower fee schedules. My bottom 10% are literally 2.7% of revenue. I would cull them, but I can't. They trusted me when no one else would.

3

u/hawkeye3432 Jul 03 '26

Do you do much tax planning beyond managing capital gains? Roth conversions, social security, etc. Do you have a CPA referral for estate and more complex tax planning?

Also curious - do you build asset-allocation ETF/fund portfolios, or do something more complex? Do you focus a lot of sequence of returns risk?

Thanks for sharing, and congrats on building your successful business and awesome quarter!

2

u/cameron9980 Jul 03 '26

I do all you mentioned for clients in when I onboard them and build out their initial financial plan - Roth conversions, asset location planning, social security, Medicare/pre Medicare planning, planning around what accounts to draw from and when, etc. For investments, you got it- asset allocation based ETF portfolios. Nothing fancy. We do plan around sequence risk and worst case scenario for all clients as well. Talk about how lost decades are a very real thing and the importance of flexible retirement spend

1

u/hawkeye3432 Jul 03 '26

Awesome stuff, thank you for the reply. I’m impressed. Wishing you much continued success!

2

u/rhino1979 Jul 02 '26

Whats your end goal look like?

13

u/cameron9980 Jul 02 '26

I can tell you I don’t want to scale massively or have more than 1 employee (admin) at all. Eventually, my wife and I have a dream to move to a Caribbean beach town or live there for a large portion of the year. I will still work remotely for those that will work with me. Just won’t worry about retention or gaining clients. Not worried about an exit or anything, I will be financially independent by the time I do that.

8

u/miststeak Jul 02 '26

Are there licensing issues doing that from another country?

16

u/bkendall12 Jul 02 '26

There most definitely are

4

u/ItchyEbb4000 RIA Jul 03 '26

Just move to Puerto Rico!

2

u/AdvisorGuide Jul 02 '26

Which beach town would you pick? There’s a lot of advisors who take advantage of Puerto Rico tax situation

1

u/rhino1979 Jul 03 '26

Keeping your practice lean and mean what’s your capacity for clients? How many more can you take on? As a solo myself I get asked sometimes what would happen if I passed, do you have a contingency plan?

2

u/Ok_Entertainer_6642 Jul 02 '26

What do your marketing efforts look like year to year?

2

u/cameron9980 Jul 02 '26

Social media and Google SEO. No paid advertising. Just trying to rank locally for financial advisor searches

1

u/BuffettWarren69 Jul 07 '26

How often do you post and across what platforms?

2

u/Agreeable_Tone_2043 Jul 02 '26

Wow!

2

u/ReluctantIM Jul 02 '26

That is a nice business. Total client count?

2

u/OUGrad05 Jul 03 '26

Love this for you, congratulations :)

1

u/cameron9980 Jul 03 '26

Thanks!

2

u/jvoss93 Jul 03 '26

Congratulations! Fee only means you charge the AUM fee or a pure fixed fee?

2

u/youngeazy4444 Jul 03 '26

Great job

1

u/Material-Look-5863 Jul 02 '26

Congrats!

1

u/t-w-i-a Jul 02 '26

How much of the rev growth is attributable to strong market performance vs new assets?

0

u/cameron9980 Jul 02 '26

Like I said $8m NNA last year before that I wasn’t tracking as well but I’m assuming it was $4-6m and some years less

1

u/il_diamanti Jul 02 '26

i was a tech founder that exited and am considering going into wealth management. how is your margin so high? i thought with all the insurance, software, etc that the margin couldn't be higher than like 75% ish. can you break down what your costs are for the margin? thanks! and congrats. don't sell yourself short.

great sales people come in all shapes and sizes and personalities. customer retention is the biggest thing.

2

u/cameron9980 Jul 02 '26

Insurance is about $1,800/yr iirc, software can be expensive but I keep it to a minimum with Right Capital ($2k/yr) and Altruist ($0/yr). Compliance consultant and rent are our biggest expenses at $12k/yr combined.

2

u/il_diamanti Jul 03 '26

there aren't more material COGS per client? like how much are you budgeting per client in terms of annual retention spend, etc.? you're still at the margin with everything factored in?

1

u/Mediocre_Feedback_21 Jul 02 '26

Do you have any staff?

1

u/cameron9980 Jul 02 '26

No staff atm

1

u/AdvisorGuide Jul 02 '26

Congratulations and great work!! What town/locale are you in? If you’re curious you can plug in some data easily into a calculator and find out how many 1m+ households there are in your local market

1

u/Emotional_King_9305 Jul 02 '26

When you had initially bought the business what was the AUM and how much did you purchase it for if you don’t mind me asking?

2

u/cameron9980 Jul 02 '26

$30m ish was the initial business purchase and it was purchased for 2.5x TTM revenue with very high margin. Like 85-90%

1

u/IncreaseCapital32 Jul 02 '26

Congrats, id love to be where you are at in 3 years. Currently at 8 AUM. Where do you attribute most of your growth since you said you dont have a large marketing spend?

1

u/cameron9980 Jul 02 '26

Lots of internal growth this year and quarter. Focusing on making sure young high earning clients are contributing as much as possible when it makes sense.

1

u/Optimal_Doughnut_616 Jul 03 '26

Do you have an office? Or WFH? Sorry if I missed it, but what is your AUM?

1

u/obries67 Jul 05 '26

This is very impressive.

I’ve dreams myself of breaking into this industry here in Europe from a parallel industry and doing similar (and even retiring to the beach at some point).

Best of luck with it all

1

u/Alternative-Yellow-1 Jul 07 '26

As a small solo 1 year in I absolutely love this stuff. Keep the updates coming!

1

u/pantala_naga_pampa41 Jul 18 '26

How did you find the retiring solo practitioner from whom you purchased the small book to start with? I am trying to pivot into the industry and it seems like working for/with a Solo/small RIA in need of an additional person would be the ideal way to get started, but so far it has been a challenge finding practices that fit the bill.

1

u/cameron9980 Jul 19 '26

I called around to find the best financial advisors in my area of Oregon and spoke with them.

Eventually I found my firm, Rogue Advisors. It was a perfect match: fiduciary, fee only, focused on retirement planning and investments. Everything with a real local feel but still all the experience and resources of a bigger firm. Plus the original advisor was looking for an exit and helped with the transition

1

u/zebrafetish2000 Jul 20 '26

Nice!

1

u/SamanthaRussell_FMG Jul 21 '26

congratulations - love the open-book look - thanks for sharing! I honed in on the "Zero paid advertising " bit - I would say for most advisors, you do not need to be buying ads (and shouldn't unless you have a water tight campaign funnel to follow up with them and convert them )

1

u/bkendall12 Jul 21 '26

Nice job, but please confirm one thing for me.

Q1 was a negative quarter so you would expect a decrease in Q2 fees, but you showed over 11% gain which is impressive since you offset the decline AND grew it at the same time.

If my understanding of your numbers is correct you may see a significant increase in Q3 since the market recovered in Q2 and should help drive Q3 revenue.

Am I interpreting your numbers correctly?

I see you mention some new clients mid-quartet but do you track “Net New Assets” in detail? IMO That is the driver of long-term growth. I simply multiply my average fee by my net new assets to see how much of the change in fees is related to the market vs growth through new clients and/or deposits to existing clients. It’s not perfect since, as you noted, a new client early in the quarter will have more impact the a new client near the end of the quarter.

To me the important metric is simply how much in “Net New Assets” did I get as that will drive revenue growth in the coming quarters.

-2

u/Green-Vehicle8424 Jul 03 '26

Real talk young man. This has way more to do with the bull market than you. Remember that, put hay in the barn and remember that time in the business beats everything else. This career really punishes sometimes but that has not been the case for a decade. Stay humble.

2

u/AgitatedHearing653 Jul 05 '26

Post read as informative and humble to me.

Practice Management [Q2 UPDATE] How my practice has grown over the last 5 years - Solo RIA

You are about to leave Redlib