Schwab Advisor Services’ 2022 Independent Advisor Outlook Study
For 15 years, Schwab Advisor Services’ Independent Advisor Outlook Study (IAOS) has sought to gauge sentiment on key topics and issues of the moment for independent advisors. The latest findings reflect advisors’ outlook for growth, insights into perceived opportunities and barriers to growth in the current environment, anticipated client interest in investment personalization, especially amongst millennials, and the long-term view on talent management.
“As we begin 2022, we reflect on the previous year when industry growth topped all-time highs across firms of every size.
We think the trajectory is only going to continue, and we are looking forward to working alongside advisors to help them chart and manage their growth, compete for new client assets, and build firms with a common purpose and strong culture.”
Jon Beatty, Managing Director & Schwab Advisor Services’ Chief Operating Officer
Continued growth lies ahead for the independent advice industry as nearly all firms (93%) expect growth will continue over the next five years, with a projected uptick of 17% in terms of the average net new assets expected per year over this time.
|Nearly all firms expect growth in net new assets|
Across the board, most advisors have a strategy in place to continue to grow at their current rate (43%) or faster (26%).
|Firm approach to growth|
The top reported growth driver is acquiring new clients (64%), and almost three in five advisors (57%) are looking to attract new clients who began investing in the past 18 months. They plan to do this via a combination of working with existing clients to reach the next generation, using technology more, recruiting younger advisors and offering new solutions and services.
Firms looking to attract
|Actions taken by Firm to attract
Beyond adding new-to-firm clients, growth is also expected to come from building relationships with centers of influence and driving referrals (36%) and growing existing client relationships (34%).
|Top drivers of growth|
Growth levers: Not one size fits all
While firms across the study largely share a robust outlook on growth, the data shows that firms emphasize different levers to achieve it, including:
- Talent: Focusing on organizational structure, attracting and retaining talent, and anticipating skillsets needed for the future as they are essential to supporting growth.
- Sales and marketing: Making investments in sales and marketing to actively create strategies to meet target client needs.
- Client experience: Using target client personas to better meet client expectations, creating strategies to meet clients’ needs, and identifying specific client segments for expansion.
Getting personal: Understanding what investors want and delivering it at scale
More than half of advisors (52%) believe that investors are looking for added personalization within their investment portfolios over the next five years. Of those clients seeking personalization, advisors cite that Millennials will lead the way (38%), followed by Baby Boomers (26%), Gen X (22%), and then Gen Z (10%).
|View on Personalization of Investment
Portfolios in Next 5 Years
|Generations’ Needs for
“Personalization is a growing part of every industry, and it is particularly important to investors. More people are asking questions about how, where, and why they invest, beyond the basic goal of wealth accumulation. Clients increasingly expect there to be an understanding of needs and values, and to have access to financial solutions that will align with them,” said Beatty. “The advisor/client value proposition has its foundation in a personalized understanding of the client, and the emergence of new tools and investment solutions to put values into action is opening a whole new opportunity for RIA firms.”
Advisors appear confident that they will be able to scale the delivery of personalized investment solutions: over half (53%) say this offering will be somewhat scalable, and almost a third (28%) think it will be very scalable. They will be looking to adapt by finding new ways of building and maintaining relationships with clients (59%), utilizing better tools or approaches to assess clients’ needs and values (56%), and providing education about investing to the whole family (51%).
|Scalability of Providing
|Ways for Advisors to Provide More
Talent: Strategic and challenging priority
Overall, advisors at firms with two or more employees are confident that they can meet their clients’ current and future needs with their talent approach. The majority (92%) report their talent strategy reflects the needs of their current client base, and almost three-quarters (74%) say they are also hiring today to ensure they have the skillsets they need for tomorrow.
Two-thirds of firms (66%) have a clear talent strategy in place to help them grow, but even so, finding talent remains by far the greatest challenge. Almost two in five (37%) firms cite finding talent as a top challenge, more than three times other areas of talent management, including managing people (11%), ongoing training and development (9%), building a cohesive culture (9%) and knowing how to compensate and reward talent (9%).
|Attitudes Towards Managing Talent
|Top Challenges of Talent Management|
As such, finding, developing, and retaining talent is one of the leading barriers for advisors’ optimistic outlook on overall firm growth (#2), sitting between balancing time and priorities (#1), and creating operational efficiency (#3).
Around half of firms (49%) focus their recruiting within the finance industry itself, but the other half are branching out into areas including sales, communications, and technology. Among the top five attributes they seek (in order of importance): work ethic, attention to detail, team player mentality, ability to communicate with clients in person, and commitment to the firm.
|Recruitment from Other Industries||Top 5 Sought After Skills|
“We all have so many things constantly vying for our attention, not to mention so many options for managing our finances. That’s why the relationship between advisors and clients is so critical. By keeping the attention of clients and engaging with them, the relationship itself helps drive growth. And it is people who sit at the heart of these valuable relationships,” said Beatty.
About the Study, Boilerplate, Disclosures
About the Independent Advisor Outlook Study
The Independent Advisor Outlook Study (IAOS) is an online study conducted for Charles Schwab by Logica Research. Logica Research is neither affiliated with, nor employed by, Charles Schwab & Co., Inc.
The survey responses come from 723 independent investment advisors who custody assets with Schwab or TD Ameritrade Institutional, representing a total of $291B in assets under management (AUM). Participation is voluntary, participants are not incentivized, and the typical (median) survey length was 11 minutes. The study was conducted from October 12 through October 28, 2021.
Detailed findings can be found 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. Follow us on Twitter, Facebook, YouTube and LinkedIn.
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