Case Study: a large trading firm improves margins by outsourcing trading with GeoWealth

Why More AUM and Top-line Revenue Can Lead to Lower Profit Margins

The case study examines a large trading firm facing the challenge of diminishing profit margins despite growth in assets under management (AUM) and new client accounts. The firm discovered that the operational burden of manually processing a high volume of recurring trades was eroding profitability, a common issue that GeoWealth's outsourced trading service is designed to address.

GeoWealth provided a solution by automating the execution of recurring and maintenance trades, which typically constitute 70-80% of an RIA's trade volume. By leveraging GeoWealth's trading experts and service center, the firm reduced its operational burden and fixed costs. This allowed its operational expenses to fluctuate in alignment with revenue, leading to healthier profit margins, more consistent financial ratios across market cycles, and a mitigation of key person risk.