Schwab RIA Talent Study Reveals Industry Attributes That Attract Advisors to RIA Profession

Relationship-based client interactions, ability to contribute to firm growth, and potential for greater work/life balance draw RIA talent to industry

Wednesday, September 24, 2014 8:00 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"By understanding the career paths of advisors as well as the aspects of the profession that draw new talent to it, RIA firms can better prepare for and capture the many opportunities ahead."

SAN FRANCISCO--(BUSINESS WIRE)--Schwab Advisor Services released the results from a first-of-its kind survey today examining the career paths of independent registered investment advisors (RIAs) and the attributes of the profession that attract talent into its ranks. Advisors in the study indicate being drawn to the industry by: opportunities for relationship-based client interactions, the ability to directly contribute to the growth of their firm, and the potential for greater work/life balance. The RIA Talent Study represents responses from 571 advisors who shared their perspectives in four key career areas: becoming an RIA, being an RIA, and career management and recruiting.

“The RIA business is highly relationship-oriented with a strong focus on doing the right thing for clients,” said Neesha Hathi, Schwab Advisor Services senior vice president. “Our study results indicate that independent advisors indeed value the attributes that have become the industry’s hallmarks. It’s also encouraging to see younger advisors being drawn to the profession for many of the same reasons as well as by the tremendous growth opportunities present in the RIA industry.”

The RIA Talent Study examined the top reasons advisors selected a career in the RIA profession and what drew them to the space. The study also investigated certain characteristics of the RIA industry and the paths most commonly taken to become an advisor.

Findings from four key areas in the RIA Talent Study include:

Becoming an RIA

  • One in three (32%) of the advisors surveyed first heard about a potential career in the industry from a colleague or friend. A combined two thirds report that their current position is their ‘second’ (43%) or ‘third’ (21%) career.
  • When considering their career options, more than half of the respondents report having looked at other investment-related firms (including wirehouses and brokerage firms) prior to choosing a position at an RIA firm.
    • This is particularly true of advisors under age 40. Thirty-five percent of advisors under 40 considered a wirehouse firm before working at their current RIA firm versus 26 percent of those aged 40 – 50 and just 11 percent of those over 60 years.
  • Prior to their current RIA role, approximately half of both men (55%) and women (48%) advisors held a position as an advisor at another financial services firm:
    • Women are more likely than men to have worked at other RIA firms (38% vs. 27%).
    • Men are more likely than women to have also had roles in sales (38% vs. 15%) and trading (35% vs. 16%), while women more often held previous positions in operations (34% vs. 17%) or administration (23% vs. 14%).

Being an RIA

  • The most important reasons reported for being an independent advisor include working for a smaller company (49%), greater work/life balance (47%) and greater earnings potential (41%). However, younger advisors (those under 40) also report being attracted by the opportunity to contribute to firm growth (55%) and the opportunity for greater career advancement (47%).
  • Three quarters of advisors (76%) indicate having a long-term commitment to the RIA industry, and the majority (58%) believes the profession offers more challenges and opportunities for growth and learning when compared to other types of models in financial services (wirehouses, banks).
  • When it comes to skills that drive success in their roles, a strong work ethic (44%), building and nurturing relationships (35%) and the ability to develop the business/grow clients and assets (31%) are considered to be the most important.
    • Women are more likely than men to emphasize the importance of building/nurturing relationships (46% vs. 33%) and being well-organized (32% vs. 19%).
    • Men are twice as likely as women to consider networking critical to success (16% vs. 8%).
  • Ninety-three percent of advisors indicate that improving the financial well-being of their clients is an important benefit of their RIA career. This is followed closely by having the authority to make decisions (81%), and having close and ongoing relationships with clients (79%). The majority of the advisors surveyed believe they are able to enjoy these outcomes in their current position .

Career Management

  • Independent advisors report that their firm actively invests in, and provides support for, their individual career development.
    • This includes informal on-the-job training for the majority (70%) while fewer report access to formal in-house training (10%).
  • When seeking new advisor talent, networking is a dominant means by which firms find qualified advisors (60%), followed by cultivating talent from within (32%).

Recruiting

  • When it comes to recruiting policies that encourage a diverse workplace, 69 percent of RIAs consider the industry to be about equal with other types of financial services firms.
  • About half (49%) feel the RIA profession provides appealing career opportunities to a diverse talent pool versus other types of financial services.

“For today’s independent advisors, identifying, attracting and cultivating diverse talent who understands and values relationships is a strategic business imperative,” said Hathi. “By understanding the career paths of advisors as well as the aspects of the profession that draw new talent to it, RIA firms can better prepare for and capture the many opportunities ahead.”

Complete results from the Schwab RIA Talent Study can be downloaded here.

Note: Select results from the RIA Talent Study will be included as part of a live webcast: Executive Presence: Positioning Yourself for Success, hosted by Neesha Hathi in partnership with the Center for Talent Innovation (CTI) on Friday, Sept. 26 at 9 a.m. PT. The webcast is designed for professionals looking to optimize their personal executive presence potential and executives seeking practical advice and tools to help mentor their employees and foster a culture that is conducive to attracting and retaining female talent. Please click here to register.

About the RIA Talent Study

The Schwab RIA Talent 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 are self-reported by study participants. Schwab did not independently verify the responses. Advisors participated in the study between February 4 and February 16, 2014. Qualitative interviews took place in March, 2014.

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, LinkedIn and our Schwab Talk blog.

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.

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