Leaders to independent advisors: “There’s a bull market for advice”

“There’s a bull market for advice.”

That was the answer that Schwab President Rick Wurster gave when asked what broader industry trends would influence the Registered Investment Advisor (RIA) industry over the coming years.

On the mainstage of this year’s Schwab IMPACT conference in Philadelphia, Rick went on to describe the expanding and evolving needs that are driving the demand for advice from clients.

“They want someone to help them not only with their investing, but to integrate taxes into their plan, to integrate their trust and estate work, and to think about the generational transfer of wealth.”

It’s this need for holistic support that lends itself so well to the success of the RIA model, according to Schwab CEO and Co-Chairman Walt Bettinger. “As a fiduciary, you deliver on that every day. You’re in a position to assure your clients that their interests are at the forefront of all you do.”

In the opening keynote session, Schwab Advisor Services COO Jon Beatty provided some strong data to further illustrate the “bull market”, sharing how the RIA channel is the fastest growing financial services segment.

He spoke about how RIA assets tripled between 2011 and 2021 alone. He shared that according to projections from Cerulli, this profession would overtake the market share of the wirehouse channel within the next five years.¹

“The advised market was $31 trillion at the end of last year, and the RIA channel had just $8 trillion of it! That sounds like a $23 trillion opportunity to me.”

While the road to going independent for many advisors has traditionally been to launch a new firm, Head of Advisor Services Bernie Clark provided insight into how choices have been expanding for advisors looking to break away.

While new RIA starts were down 40% in 2022, new advisors joining an existing RIA firm were up 45% over the same period.² Bernie let the advisors in attendance know how vital their firms were to this trend.

“Teams are coming out and understanding you’re part of the answer. They don’t have to have only their name on the door, they can have your name on the door.”

As AI continues to make headlines and inroads, Jon shared his view that “these forces of change, automation, data, and AI will impact everything from relationships and family dynamics to wealth and financial security.”

Walt expanded on this viewpoint the following day, digging into how both regulatory concerns and the current limitations of the technology have shaped the ways in which AI is being implemented both at Schwab and within the broader financial services industry.

Right now, “the emphasis is on the ability to serve you better, to delight you, and delight your clients at this point, rather than anything that gets involved in managing money or advice.”

He shared one example of how Schwab is working with AI to increase the ability to serve clients, which is “in test with a significant number of our reps.”

This capability helps service reps to save valuable time on behalf of clients when searching internal knowledge bases, “with that information automatically coming to their fingertips,” said Walt. This allows the reps to give that time back or spend it deepening the relationship and digging further into client needs.

Bernie highlighted the willingness to embrace open architecture and integrate third party technology as major competitive advantages for the independent advisor model.

“You know, no matter what those other traditional advice models can do, they can’t find their way to open architecture. They can’t do it. The economics won’t allow them to. The culture, quite honestly, won’t allow them to.”

He cited the benefits of this flexibility when considering that “we are up against fraud, cyber, malfeasance, everything that’s in the industry, as well as the continuing evolving arms race of technology.”

His advice to the advisors?

“Hang on to it, wrap your arms around it.”