Page 29 - Investment Advisor June 2023

actually going to say [that we’re unsatisfactory] at client ser- dent model,” the report concluded. Here are eight VIP views
vice, but we make it up in other areas?” on how advisors can keep growing and what lies ahead for the
the search for new Business Models: Many advisors are RIA industry.
chasing the same prospective clients, Kitces said, noting those the industry will expand lending and tax services, as well
are mainly baby boomers because about 80% of investable as income solutions, for clients. “There will be a big shift
assets are still in their hands. He added: “I know a lot of advi- in firms addressing more of their clients’ liability needs in
sors these days have been starting to ask questions [about] response to growing demand for lending services — credit
whether there’s anything wrong with the AUM model and consolidation, new and second mortgages, pledged asset lines
whether the AUM model’s going to die.” The problem, he said, and so on,” said Bernie Clark, managing director, head of
is that there isn’t “anything wrong with the AUM model”; it’s Schwab Advisor Services.
just that advisors are running out of potential clients. “Tax services may also become more important as tax
laws continue to evolve. We always see
a huge movement of assets when inves-
tors become wary of any potential tax
law changes. … Finally, income solu-
tions have been a very big question in
advisors’ minds over the past several
years — short-term duration, guaranteed
return — and this will continue to be
important well into the future,” Clark
explained.
rIAs will achieve greater scale while
maintaining personalization for clients.
“The rise of the enterprise RIA is shifting
the broader landscape,” according to Jon
Beatty, COO of Schwab Advisor Services.
“These organizations are driving M&A,
which is helping solve real business
challenges and creating opportunities
for solo entrepreneurs. The transaction
Where’s Advisor Growth “The industry must move activity has allowed capital, private equi-
Headed? toward the convergence of ty and otherwise, to flow into the space.”
The spring edition of the Schwab Plus, he said, “When combined with
Advisor Services’ Independent Advisor banking and broker-dealer the proliferation of services and fintechs
Outlook Study highlights the fact that activities. Otherwise, catering to RIAs, the industry is starting
“advisors don’t see the industry slow- we’re just going to to show how it will be able to achieve
ing down, and that growth continuously scale while still maintaining the person-
brings change, whether in the form of continue in this vicious alization that really started this industry.”
new opportunities, increased complex- cycle of disconnectedness, Clients will increasingly look to
ity or new challenges,” the authors of the rIAs for a one-stop-shop experience,
report said when it was released. “The and I don’t think the which includes banking. “The industry
consistent pace of growth in this space marketplace will must move toward the convergence of
over the past two decades has taken bear that.” banking and broker-dealer activities.
many forms,” according to the report. Otherwise, we’re just going to continue
“Against the backdrop of individual —Jalina Kerr in this vicious cycle of disconnected-
and family wealth creation, we have ness, and I don’t think the marketplace
seen growing demand for fiduciary advice — and as firms have will bear that,” explained Jalina Kerr, managing director,
expanded to meet this demand, we’ve seen evolving ways of Client Experience at Schwab Advisor Services.
attracting and retaining the best talent to serve the growing “The expectations of investors — and, more broadly, people
needs of clients,” Schwab said. consuming financial services — are getting higher. Clients
Industry growth has also “been buoyed by a steady pace want instantaneous service and a one-stop-shop experience,
of innovation across technology, products and solutions, and and driving automation and consistency will be central to
operational best practices, all in the service of the indepen- achieving this,” Kerr said.

June 2023 Investment AdvIsor 27