Focused on Legacy, RIAs Emphasize Reputation, Relationships and Centers of Influence as Keys to Acquiring the Next Generation of Wealth

Latest Independent Advisor Outlook Study from Schwab Advisor Services provides independent advisor perspectives on the next generation of clients and the implications for building the firms of the future

Thursday, June 19, 2014 5:45 am PDT



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"It will be critical that everyone, from advisors to office support staff, knows and understands Generation Now and is able to meaningfully connect them at every point of interaction to their firm’s value proposition"

NAPLES, Fla.--(BUSINESS WIRE)--Charles Schwab Advisor Services released results of its 15th semi-annual Independent Advisor Outlook Study (IAOS) today at its annual EXPLORE® conference. Bernie Clark, executive vice president and head of Schwab Advisor Services, cited IAOS findings as he spoke with an audience of more than 160 independent registered investment advisors (RIAs) about the significant opportunity for growth over the next decade, as the next generation of clients – which Schwab calls ‘Generation Now’ – begins to actively seek financial advice and guidance to help them meet their financial goals. Currently, those between the ages of 30-45 control nearly $3.5T in investable assets.1

“Nearly 40 percent of RIA clients are retired, 30 percent are less than ten years from retirement and 63 percent of those retired are withdrawing from portfolios, including from principal, according to our survey findings,” said Clark. “With this in mind, now is the time for independent advisors to actively focus on acquiring the next generation of clients and assets – especially given that the majority of advisors tell us they are planning for legacy.”

The new IAOS results reflect the opinions of 720 independent advisors representing an estimated $180 billion in assets under management. This wave of the study set out to better understand independent advisors’ perspectives on the opportunities they see with the next generation of clients, and to understand how they are planning to augment their strategies for business growth in order to take advantage of the potential opportunities.

The Next Generation of Assets: Business Challenge, Opportunity or Risk?

Given the aging of RIAs’ current client base, advisors are increasingly focused on sourcing the next generation of clients.

  • With $16T in total wealth transfer anticipated by 20502, advisors are divided on whether the next generation investor presents a risk, an opportunity or simply a challenge. When asked about the movement of money to the next generation and the fact that assets could be spread out across more people or children:
    • Thirty-seven percent of advisors see risk and believe they will need to develop new client relationships that will enable them to grow their business and maintain asset levels.
    • Forty percent see an opportunity to develop a model to meet the needs of emerging clients and smaller accounts.

“We feel that the next generation investor is unequivocally an opportunity for independent advisors,” said Clark. “They have significant wealth, and their individualized priorities along with the competing financial needs in their lives can benefit greatly from the customized, client-focused advice that independent advisors can deliver.”

Attracting the Next Generation of Wealth: Differentiation, Centers of Influence (COI) and Social Media

  • Demonstrating firm expertise and services is the top priority (91%) for attracting the next generation and is deemed extremely or somewhat important by advisors in the study, followed closely by three actions all tied at 83 percent: having a strong reputation based on firm reviews and centers of influence relationships; offering a unique service or value proposition; and clearly communicating the benefits/differences of the RIA model.
  • When asked about the extent to which members of their firm can effectively articulate the firm’s value proposition to prospects, clients and influencers, a full 90 percent of firms report that client-facing advisors can do so all or most of the time.
  • Approximately one third of independent advisors (32%) consider referrals to be a formal and routine aspect of their firm’s culture, but more than half (55%) say that the role of referrals is informal and is up to individual advisors – some ask for referrals and some do not. Sixty-nine percent of advisors believe cultivating client referrals differentiates their firm.
  • Fifty-five percent of firms report that they measure staff performance based on the amount of new assets they bring to the firm.
  • With respect to cultivating the next generation of investors, half of advisors (53%) believe reaching the next generation will require engagement with entirely new COIs, while 47 percent believe that the current COIs will remain relevant.
  • Fifty-nine percent of study participants reported social media and online resources are used mainly as a tool for marketing and raising firm visibility versus a means of increasing engagement with current clients. Social media is noted, however, to be vital to communicating with the next generation of clients by 32 percent of firms. Advisors firmly believe (68%) that in-person contact will remain the crux of their business and that social media can never replace personal interaction.

“Whether it is the way advisors connect and build trust with these individuals directly, or how they engage the centers of influence around them, our findings reveal that relationships will be a key driver of RIA firm differentiation for this next generation of investors,” said Clark. “It will be critical that everyone, from advisors to office support staff, knows and understands Generation Now and is able to meaningfully connect them at every point of interaction to their firm’s value proposition,” he recommends.

RIA Firms of the Future: Legacy, Competition and Service Offerings

  • Seventy percent of independent advisors have plans for creating a legacy firm – one that lives beyond its founders. Of these, close to half (48%) are planning an internal succession/partner buyout.
  • When considering the next generation of leadership for their firms, independent advisors are focused most often on cultivating leaders from within (37%), versus looking externally (14%). However, almost one third (30%) are not attempting to grow the firm’s leadership in the near future.
  • Over half (56%) of independent advisors believe automated portfolio management (“robo advisors”) could supplement their current offer/help grow their business, versus 44 percent who consider them an increasing threat.
  • In terms of their service offerings, many advisors are staying with their core investment advisory business – long term financial planning, including retirement planning (54%), planning related to clients’ employer-sponsored retirement accounts (47%), charitable planning (37%), estate planning services (35%) and workplace retirement plans for business owners (34%).

“Today’s independent advisors must make not one, but multiple strategic decisions to successfully face the changing environment around them and capture the potential opportunities ahead,” said Clark. “Each decision, whether the approach for acquiring new assets, finding and cultivating the next generation of talent, or evolving technology and service offerings, all ultimately impact the future growth and sustainability of today’s firms and lays the groundwork for building a successful legacy.”

Detailed survey findings can be found at

About the Independent Advisor Outlook Study (IAOS)

The current Independent Advisor Outlook Study reflects the opinions of 720 independent advisors representing an estimated $180 billion in assets under management. The current wave set out to better understand advisors’ perspectives about the opportunities and challenges they see with respect to the next generation of clients, including the ways in which they are planning to augment their strategies for business growth and their client service models.

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 are self-reported by study participants and are not verified or validated. Independent investment advisors participated in the study between April 15 and May 6, 2014.

About the Charles Schwab Generation Now Study for RIAs

Charles Schwab Generation Now Study for RIAs was conducted for Schwab Advisor Services™ by Egg Strategy, a strategic research firm. The study, which was released in 2014, included 40 participants, men and women ages 30-45 with earned or inherited investable assets of $500,000 (excluding real estate and business holdings), or a house-hold income of at least $150,000. The term Generation Now reflects the immediate opportunity that this incoming cohort of high-net-worth investors may represent for RIAs. All data was self-reported by participants and not validated or verified. Egg Strategy is not affiliated with nor employed by Charles Schwab & Co., Inc. Investors participated in this study between March, 24 2014 and April, 11, 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 Follow us on Twitter, Facebook, YouTube, LinkedIn and our Schwab Talk blog.


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,, 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 and

For general informational purposes only. Meant for investment advisor audiences.

Independent investment advisors are not owned by, affiliated with or supervised by Charles Schwab & Co. Inc.


1 Cerulli – Lodestar, 2012E.

2 Cerulli Quantitative Update – Retail Investor Product Usage, 2011, page 247


Charles Schwab
Susan Forman, 415-699-1654
The Neibart Group
Natalie Rix, 718-801-8385

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