Pointing to $23 Trillion Dollar Opportunity, Leader of Schwab Advisor Services Tells RIAs They Are Primed to Shape Future Success

Provides updates on Schwab Advisor Service’s efforts across technology, talent and advocacy to champion independent investment advisor success

Wednesday, November 11, 2015 5:30 am PST

Dateline:

BOSTON

Public Company Information:

NYSE:
SCHW
"This is yet another way we can work to find talent, and continue to build awareness of your firms and this industry"

BOSTON--(BUSINESS WIRE)--Speaking today to more than 4,500 attendees at IMPACT® 2015 – the largest and longest-running annual gathering of independent registered investment advisors (RIAs) – Bernie Clark, executive vice president of Schwab Advisor Services, recognized and celebrated the tremendous growth and success of the independent registered investment advisor (RIA) industry over the past decade, while pointing to an unprecedented $23 trillion opportunity1 ahead that Schwab believes advisors are well-positioned to seize.

“We hear it all the time and we know it’s true – the work you do matters and it matters most because of how you do it. You place the interests of your clients first and your relationships are the heart of your business model and they always have been,” said Clark. “You have built an entire industry – and we are proud to work with you and support your growth.”

Highlighting the industry’s exceptional growth over the past decade, from $1.6 trillion to $4 trillion in assets under management (AUM)2, and noting that this year marks the 25th anniversary of IMPACT™, Clark praised advisors, saying that “you’ve made a new experience – a highly valued one – possible. You have made it real for people.”

Clark also pointed to the opportunities for future growth of the industry, citing an estimated $23 trillion in affluent assets, from households with $500K or more to invest, that currently reside outside the RIA channel3 and represent “the kind of clients RIAs are well-suited to serve.”

Industry comes of age shaped by forces inside and outside firms

Alongside the message of growth and opportunity, Clark acknowledged that advisors must also navigate change and face new challenges that come with the increasing sophistication and maturity of the RIA industry.

According to results from Schwab’s latest Independent Advisor Outlook Study (IAOS), to be released tomorrow, the top three forces driving change within RIA firms are: talent (19%), an aging client base (18%) and technology (18%), while outside firms, the forces of change include the need to differentiate (22%), regulation (21%) and competition (17%).4

Schwab Advisor Services currently custodies more than $1 trillion in assets on behalf of independent advisors, which is nearly half of Schwab’s total assets, and Clark noted to the audience that, “For nearly three decades, we’ve worked side by side – you’ve helped us learn what works, and we’ve used our expertise and collective knowledge to help you continue to grow.”

Clark also provided updates on several key initiatives aimed at championing RIA success in a changing world:

  • Talent – He spoke about RIA Talent Advantage™, launched at IMPACT 2014 and created to prepare advisors to meet client needs as the investor profile shifts. As part of this initiative, Schwab has created the RIA Talent Advantage™ Recruitment Playbook, a new resource designed to help RIAs effectively execute their firm’s recruitment strategy, including finding and retaining diverse talent. The resource includes information from tips and tools to industry statistics and investor demographics to help advisors start to think beyond traditional candidate profiles and to attract and retain talent from untapped sources.

“This is yet another way we can work to find talent, and continue to build awareness of your firms and this industry,” noted Clark.

  • Technology In the latest IAOS, advisors reported technology is having a greater impact on their firms than the changes brought about by client demographics.5

Speaking about technology and serving the coming generations of wealth, Clark remarked, “Did you ever think social media would be a center of influence?”

“There are emerging technologies that give you new opportunities to reach people in different ways, while meeting changing expectations,” he pointed out. “That’s why Institutional Intelligent Portfolios™ sponsored by Schwab Wealth Investment Advisory, Inc. was developed – a digital solution for wealth management to help you connect and work with the next generations in the way they expect.”

According to the latest IAOS, more than one third (37%) of advisors consider that up to ten percent of new client assets in the next year are likely to be appropriate for automated investment management, and an additional 21 percent say more than ten percent of new assets are likely to be suitable. The majority (70%) of advisors say they would recommend automated investing for clients who don’t meet the firm’s asset minimums, or clients with relatively simple investment needs (67%), and half of advisors (54%) would recommend automated investing for children of existing clients or as a strategy to capture intergenerational wealth (24%).

  • Advocacy – Clark also emphasized the need to continually advocate for the industry. Citing the IAOS Study, Clark pointed out that advisors see regulation as one of the top three drivers of change in the industry.6

“We will continue to do our part in amplifying your voice – we have to stay ahead of regulatory changes so the industry can continue to grow and prosper,” said Clark. “This is critical work and we need your help. We need to take steps today in order to protect and grow this industry so that future generations of investors can experience the value you deliver.”

Schwab has been a leading advocate of registered investment advisors for nearly three decades and is committed to putting its weight behind matters that advance the RIA profession and ready the industry for the future. When it comes to its work in Washington, D.C., the firm encourages the creation of responsible government policies that protect investors and support the interests of those who serve them.

Beyond advocacy in Washington, D.C., Schwab has also actively sought ways to advocate for the benefits of the RIA model among investors. Clark shared updates on RIA Stands For You, the company’s multi-year, multi-million dollar education and advertising program designed to drive awareness of the RIA model. The campaign was recently updated with new creative based on consumer research, and includes sponsored content, paid search and an extension of the target to younger Generation Now investors (affluent investors aged 30 – 45), in addition to traditional high net worth investors.

In closing, Clark called out the importance of trust. “Everything in our world will always be about building relationships grounded in trust and based on transparency,” he said. “With all of the growth and success behind you, and all of this opportunity in front of you, it’s impossible not to be inspired about where this industry is headed,” he continued. “You are primed like never before to shape your firm and create the tomorrow that you want. We’re excited to see how you go after the opportunity ahead and, whatever comes your way, we’ll be right here by your side as you navigate some of the most exciting times this industry has ever seen.”

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube, and LinkedIn.

About the Independent Advisor Outlook Study

The Independent Advisor Outlook Study, conducted for Schwab Advisor Services by Koski Research, has a 3.65% margin of error. Koski Research is not affiliated with nor employed by Charles Schwab & Co. Inc. All data is self-reported by study participants and is not verified or validated. Advisors participated in the study between September 9 and September 18, 2015.

Detailed findings can be found at www.aboutschwab.com/press/research on November 12, 2015.

Follow IMPACT 2015 news & updates @Schwab4RIAs #SchwabIMPACT

Disclosures:

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

See the Institutional Intelligent Portfolios™ disclosure brochure for important information.

Institutional Intelligent Portfolios™ is made available through independent investment advisors and is sponsored by Schwab Wealth Investment Advisory, Inc. ("SWIA"), a registered investment advisor. SWIA is an affiliate of Charles Schwab & Co., Inc. (“CS&Co.”) and is a subsidiary of The Charles Schwab Corporation.

Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading, and support of Charles Schwab & Co., Inc., Member SIPC.

Independent investment advisors and Schwab are independent of each other and are not affiliated with, sponsored by, endorsed by, or supervised by each other.

1 Schwab strategy estimates, individual company financial reports, FDIC, ICI, Federal Research Flow of Funds, Cerulli Associates and Discovery Database, 2013-2014
2 Cerulli Advisor Metrics, Cerulli Lodestar 2012 and Schwab analysis for RIA channel growth, 2013-2014
3 Schwab strategy estimates, individual company financial reports, FDIC, ICI, Federal Research Flow of Funds, Cerulli Associates and Discovery Database, 2013-2014
4 Schwab Advisor Services, Independent Advisor Outlook Study, November 2015
5 Schwab Advisor Services, Independent Advisor Outlook Study, November 2015
6 Schwab Advisor Services, Independent Advisor Outlook Study, November 2015

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Contact:

Schwab Corporate Public Relations
Susan B. Forman, 415-699-1654
Susan.Forman@schwab.com
or
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Mayrav Weiss, 718-801-8864
sas@neibartgroup.com

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Bernie Clark, executive vice president and head of Schwab Advisor Services (Photo: Business Wire)
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