Speech follows 20th edition of Schwab’s
Independent Advisor Outlook Study
- Deep client relationships and a
differentiated position as a fiduciary will remain priorities as
advisors face change
- Nearly all advisors surveyed agree that
technology will enable firms to serve clients more efficiently
- Advisors consider finding and retaining
talent to be among the most critical business challenges over the
next ten years
Speaking today at IMPACT® — the largest and longest-running
annual gathering of independent registered investment advisors
(RIAs) — Bernie Clark, executive vice president and head of
Schwab Advisor Services, underscored the importance of advisors
leading their firms toward change while continuing to draw on their
entrepreneurial spirit. The important role of change was echoed by
findings from the 20th edition of Schwab’s Independent Advisor
Outlook Study (IAOS), which comprises a decade of insight into the
investing environment and the state of RIAs’ businesses and
clients.
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Bernie Clark, Executive Vice President
and head of Schwab Advisor Services. (Photo: Business Wire)
In his speech today before more than 4,000 attendees, Clark
asked advisors, “Is change always necessary for us in the
independent space?” and offered in response, “If you want an
enduring business that succeeds even if you walk away, then yes,
you must change.” He went on to stress that firms must “lean into
the next generation of clients and employees” and that advisors
need to be aware that “it’s hard to see the need for change when
things are good.”
According to IAOS, the independent advice industry has already
changed considerably over the past ten years, yet further
transformation in how firms operate, the advice models used, and
the composition of teams is on the horizon.
Evolving role of the advisor
When asked to reflect on the past ten years and to think ahead
to the next ten, advisors report that they are increasingly focused
on delivering comprehensive wealth management instead of solely
offering portfolio management and asset allocation. Furthermore, 61
percent of advisors say that implementing changes to their service
model to meet evolving client needs is the most critical issue they
face in the next ten years.
“The role of the advisor is shifting, and today it can include
estate planning, tax prep and legal work, even other value-added
services like career and estate planning or life coaching . . .
nothing is off the table anymore,” said Clark.
Advisors report that client relationships continue to drive
their growth, via referrals, as has been the case for the past
decade.
Balancing technology and the human touch
More than three quarters (78 percent) of advisors believe
technology will have a noticeable impact on how their firms operate
over the next decade, and nearly all (94 percent) agree that
technology will enable firms to serve clients more efficiently.
Advisors also report that, compared with a decade ago, they are not
spending as much time working in their physical offices, and they
expect this trend to continue.
Commenting on the outlook for technology, Clark said, “In a
business, you’re always balancing new technology and the human
touch, knowing that all the technology in the world can’t model how
a client feels or replace people. We need the best technology, but
we can’t let technology detract from relationships.”
Talent at the center of a successful business
Advisors consider finding and retaining talent to be among the
most critical business challenges over the next ten years.
Willingness to embrace change is the characteristic that most
advisors (81 percent) report being especially impressed by as they
interview and hire younger employees. IAOS also found that,
compared to a decade ago, firms are doing more to ensure that their
talent strategy mirrors the changing demographics of their
clients.
Addressing the importance of attracting and developing top
talent, Clark said that firms need employees who “have
credibility,” which he defined as “a combination of character plus
competence.”
Since 2007, through grants from the Charles Schwab Foundation,
Schwab Advisor Services has partnered with seven leading
universities across the country, each with a financial planning
program, to provide resources to develop tools, classroom
infrastructure, and technology to support the development of
world-class RIA talent on behalf of advisors.
In addition, throughout IMPACT, Schwab and the Foundation for
Financial Planning will share updates on their partnership to raise
funds for pro bono financial planning services for those in need,
such as wounded veterans, domestic violence survivors, and families
affected by cancer. To date, the campaign has raised approximately
$450,000, requiring just $125,000 to reach the goal of $575,000 in
donations by December 31, 2016. Clark, who is chair of the
Foundation, encouraged IMPACT participants to help complete the
campaign by pledging their support.
Advisors must shape their firms’ trajectories
Reinforcing with advisors that the future of the RIA industry is
in their hands, Clark said, “Regardless of where you go with your
business and how you decide to grow, you’re the future of this
industry,” and added that Schwab, as the largest custodian, would
help advisors navigate both the challenges and opportunities before
them and will continue to invest and innovate on the industry’s
behalf.
“We truly take pride in being champions of independence and of
your future,” he said, closing with, “Everything we do in this
business begins and ends with you, your business, and the future of
this industry in mind. We believe that collectively, we can
continue to leave a mark on the world by improving the lives of the
people we serve.”
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 is an online study
conducted for Charles Schwab by Koski Research. The current wave —
Wave 20 — represents the 10-year anniversary of the study, which
was first conducted in 2007. Koski Research is neither affiliated
with, nor employed by, Charles Schwab & Co., Inc. The sampling
error is +/-3.2 percentage points at the 95 percent confidence
level.
The study was conducted from Aug. 22 to Sept. 5, 2016, and
reflects the responses of 957 RIAs whose assets are custodied with
Schwab. Participation is voluntary. Respondents are offered the
opportunity to sign up for a summary of the results. The survey
length averages around 11 minutes. For this report, the majority of
data is reported at the total sample level. When applicable,
comparisons with prior waves of the study are made.
A detailed report on the Study, including additional findings
about market and investing sentiment, and the regulatory
environment, is available here.
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 Charles Schwab
& Co., Inc., (“Schwab”)
Independent investment advisors are not owned by, affiliated
with or supervised by Schwab.
Follow @Schwab4RIAs #SchwabIMPACT for news and
updates from IMPACT® 2016
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The Charles Schwab CorporationRob Farmer, 415-920-3816Schwab
Corporate Public Relationsrob.farmer@schwab.comorThe Neibart
GroupMayrav Weiss, 914-500-5874sas@neibartgroup.com
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