Many Independent RIAs Are Grooming The Next Generation

By Cyril Tuohy

InsuranceNewsNet

Nearly half of independent registered investment advisors (RIAs) are taking steps to groom the next generation of leaders by identifying and cultivating young advisors with leadership qualities, according to a recent survey.

The Independent Advisor Outlook Study (IAOS) recently released by Schwab Advisor Services also found that, of the advisors who reported having identified future leaders, 37 percent said their successors were prepared to lead their respective companies into the future.

In the survey of 740 RIAs conducted in September, 25 percent of advisors said their companies were already making efforts to recruit a more diverse workforce. Another 15 percent of respondents said they would be making such efforts in the future.

For years, critics of the financial advisory profession have pointed out that advisories need to hire more women and minorities if they want to reflect the rapidly changing demographic profile of the nation and survive over the long run.

Bernie Clark, executive vice president and head of Schwab Advisor Services, said it was encouraging to see companies taking steps to position themselves for a future in which young investors will expect faster answers, more rapid execution and advisories optimized for a mobile infrastructure.

More than two-thirds of advisors said they used technologies delivering real-time information and data within their firms

The changing needs of clients due to the projected growth of minority populations is also challenging RIA firms to think about who they want to lead their companies and what direction those companies should take.

“It is tremendous to see RIAs not only acknowledging these factors, but also taking the steps necessary to position themselves to maintain their growth momentum and cement the founders for their firms’ futures,” Clark said.

The results of the survey were released at Schwab’s annual IMPACT 2014 conference.

In the survey, 33 percent of advisors reported that their companies had taken action in the past five years to grow their business beyond “organic firm growth.”

Of those advisors, 54 percent said they brought an individual advisor with a “transferable book of business” into their firms, and 51 percent reported buying, joining or merging with another RIA.

The survey also found that 49 percent of advisors would sell their business in the next five years for the right price or to the right partner.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].