WASHINGTON--(BUSINESS WIRE)--Speaking to more than 5,000 attendees at Schwab IMPACT®, the
largest and longest-running event for independent advisors, Bernie
Clark, executive vice president and head of Schwab Advisor Services™,
pointed to the industry’s trajectory of growth over the past decade and
underscored the critical importance of independent registered investment
advisors (RIAs) in helping lead investors out of the depths of the
financial crisis.
“When clients didn’t know what to do, you provided a path,” said Clark.
“You not only saw clients through some of the scariest financial times
in this country’s recent history, you were a refuge when trust was
broken.”
According to the latest findings from Schwab’s Independent Advisor
Outlook Study (IAOS), released today at IMPACT, during the last decade,
over a third (39%) of independent advisors report that they have
emphasized their fiduciary duty, while maintaining transparency with
their clients (72%).
“When clients were skeptical, you gave them confidence . . . when the
pendulum swings, in either direction, your work matters . . . at a
fundamental and a human level,” said Clark. “Fiduciary means something.
You have demonstrated that for years, and there is no doubt you continue
to set the standard for advice in the industry.”
According to IAOS, the global financial crisis also affected advisors’
firms in several other ways, including changes in the use of technology
(61%) and investment products (48%) and the frequency with which they
communicate with clients (41%). On the other hand, most advisors report
maintaining pricing (78%) and staying the course with respect to their
investment philosophy (71%) over the past decade.
Industry success brings competition
The growth and maturity of the independent advisor industry has brought
new levels of competition among independent firms. According to IAOS,
two-thirds of independent advisors say differentiation is essential.
A majority of independent advisors feel that, when compared with
wirehouse advisors, they are differentiated when it comes to acting in a
client’s best interest (95%), understanding a client’s specific needs
(84%), and understanding and supporting a client’s entire financial life
(83%).
Among the ways in which RIAs say they differentiate from other
independent advisors are client service and understanding clients’
unique needs. In each case, two in three advisors feel there is
differentiation.
There is also notable competition when attracting and retaining talent.
In the past five years, a third of advisors say their firm has hired
someone directly from another RIA firm. One in five advisors say someone
in the firm has left to work at another RIA firm.
When competing for talent, compensation is seen as the most important
factor for attracting (61%) and retaining (53%), followed by clear
advancement opportunities (31% attracting and retaining), and flexible
scheduling (27% attracting; 31% retaining).
Market expectations and client portfolios
Most advisors (70%) expect the S&P 500 will continue to go up the next
six months, but this expectation is tempered by real concern about an
eventual downturn. Seven in ten advisors (71%) report that they are
somewhat or very concerned about the possibility of a downturn. Clients
are mirroring this concern: eight in ten clients (82%) worry about the
possibility of a downturn and four in five advisors have had to reassure
at least some of their clients in the past six months.
Among factors perceived by advisors as having a negative impact on the
markets over both the short and long term are tariffs on imported goods,
followed by disputes over trade policies and the rising interest rate
environment.
Looking ahead: Tapping into trends
Firms are turning to their next-generation advisors for insights in
several areas, including technology, marketing, and firm culture.
Forty-two percent of respondents report that young advisors are most
likely to advocate for using new technologies within firms, followed by
operations staff (39%), client-facing staff (30%), and older
advisors/employees (28%).
About the Independent Advisor Outlook Study
The Independent Advisor Outlook Study is an online study conducted for
Charles Schwab by Logica Research (formerly Koski Research).
Logica Research is neither affiliated with, nor employed by, Charles
Schwab & Co., Inc. The study was conducted from August 24 – September
12, 2018 and reflects the responses of 783 RIAs who custody their firm’s
assets with Schwab. Participation is voluntary. A detailed report on the
Study is available here.
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.
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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.
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 Schwab.
Independent investment advisors are not owned by, affiliated with, or
supervised by Schwab. For informational purposes only.
©2018 Charles Schwab & Co., Inc. (“Schwab”) All rights reserved. Member SIPC.
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