Page 22 - Investment Advisor July/August 2021

RIA LESSONS & LEADERS

By Jeff Berman

Schwab: Advisors ‘Bullish’ on Growth, but

Barriers Remain for RIAs

New forms of competition continue to represent the largest hurdle,
according to the firm’s latest Independent Advisor Outlook Study.

espite the ongoing pandemic
and other challenges, Charles
DSchwab executives and two
independent advisors who custody with
the firm gave a mostly upbeat growth
forecast for the RIA sector during a call
with reporters June 8 in which they
discussed key findings of Schwab’s lat-
est Independent Advisor Outlook Study.
“Advisors are very bullish about
the industry’s prospects for continued
growth,” more so than they were in
August 2020, according to the study.
During the pandemic, innovation played
a major role in the industry growth and
most advisors see opportunities for con-
tinued innovation, it also found.
Advisors expect changes from 2020
to have a continued impact on their
businesses, according to the study. For Forty-eight percent of responding clients (14%, up from 11%). An inability
example, remote work is providing them advisors said they expected the RIA to differentiate from rivals was cited by
with new opportunities when it comes industry will grow at a slow and steady 12%, down from 16%, and a lack of talent
to connecting with clients and also rate, down from 58% last year. But 47% was cited by 10%, up from 8%.
recruiting talent. RIA firms are becom- said the RIA industry has not fully The study was conducted online for
ing more flexible and adaptive to change matured and will continue to grow at Schwab by Logica Research from April 13
and establishing new workflows. a higher rate than the market, up from through April 26. Respondents included
“Remote work is going to be critical 33%. Only 4% said they believed the RIA 953 independent investment advisors
to making sure that people can find sector hit its peak growth and will now who custody assets with Schwab, repre-
that appropriate balance and the talent stabilize and remain flat other than mar- senting a total of $400 billion in assets
coming out of the universities,” accord- ket-based fluctuations in assets, down under management, Schwab said.
ing to Bernie Clark, head of Schwab from 7% last year. And only 1% said the
Advisor Services. RIA industry was on the decline, down INNOVATION AND TECH
The study also found that “inves- from 2%. The pandemic forced advisors to be
tors’ preference for the fiduciary model New forms of competition continued more innovative, according to Jalina
is becoming stronger and stronger,” to be the top barrier of growth for the Kerr, senior vice president of client
he said, noting this is the 14th year of RIA sector, said 27% of respondents, up experience at Schwab Advisor Services,
the study and the first time that TD from 23% last year. The second barrier yet only one in five firms polled
Ameritrade advisors were polled for it was the cost of doing business, cited by described themselves as innovative,
as part of the merger between TD and 15% of advisors, up from 13%. Close she noted. Advisors need to look to fin-
Schwab. That transaction was finalized behind was the difficulty in scaling the tech and external industries to “expand Adobe Stock
in October. current service model to serve more … client experiences and flexibilities,”

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