Schwab Advisor Services Leader Urges Independent Advisors to Focus on Building Enduring Businesses

Speech follows 20th edition of Schwab’s Independent Advisor Outlook Study

• Deep client relationships and a differentiated position as a fiduciary will remain priorities as advisors face change
• Nearly all advisors surveyed agree that technology will enable firms to serve clients more efficiently
• Advisors consider finding and retaining talent to be among the most critical business challenges over the next ten years

SAN DIEGO--(BUSINESS WIRE)-- Speaking today at IMPACT^® — the largest and longest-running annual gathering of independent registered investment advisors (RIAs) — Bernie Clark, executive vice president and head of Schwab Advisor Services, underscored the importance of advisors leading their firms toward change while continuing to draw on their entrepreneurial spirit. The important role of change was echoed by findings from the 20th edition of Schwab’s Independent Advisor Outlook Study (IAOS), which comprises a decade of insight into the investing environment and the state of RIAs’ businesses and clients.

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Bernie Clark, Executive Vice President and head of Schwab Advisor Services. (Photo: Business Wire)

In his speech today before more than 4,000 attendees, Clark asked advisors, “Is change always necessary for us in the independent space?” and offered in response, “If you want an enduring business that succeeds even if you walk away, then yes, you must change.” He went on to stress that firms must “lean into the next generation of clients and employees” and that advisors need to be aware that “it’s hard to see the need for change when things are good.”

According to IAOS, the independent advice industry has already changed considerably over the past ten years, yet further transformation in how firms operate, the advice models used, and the composition of teams is on the horizon.

Evolving role of the advisor

When asked to reflect on the past ten years and to think ahead to the next ten, advisors report that they are increasingly focused on delivering comprehensive wealth management instead of solely offering portfolio management and asset allocation. Furthermore, 61 percent of advisors say that implementing changes to their service model to meet evolving client needs is the most critical issue they face in the next ten years.

“The role of the advisor is shifting, and today it can include estate planning, tax prep and legal work, even other value-added services like career and estate planning or life coaching . . . nothing is off the table anymore,” said Clark.

Advisors report that client relationships continue to drive their growth, via referrals, as has been the case for the past decade.

Balancing technology and the human touch

More than three quarters (78 percent) of advisors believe technology will have a noticeable impact on how their firms operate over the next decade, and nearly all (94 percent) agree that technology will enable firms to serve clients more efficiently. Advisors also report that, compared with a decade ago, they are not spending as much time working in their physical offices, and they expect this trend to continue.

Commenting on the outlook for technology, Clark said, “In a business, you’re always balancing new technology and the human touch, knowing that all the technology in the world can’t model how a client feels or replace people. We need the best technology, but we can’t let technology detract from relationships.”

Talent at the center of a successful business

Advisors consider finding and retaining talent to be among the most critical business challenges over the next ten years. Willingness to embrace change is the characteristic that most advisors (81 percent) report being especially impressed by as they interview and hire younger employees. IAOS also found that, compared to a decade ago, firms are doing more to ensure that their talent strategy mirrors the changing demographics of their clients.

Addressing the importance of attracting and developing top talent, Clark said that firms need employees who “have credibility,” which he defined as “a combination of character plus competence.”

Since 2007, through grants from the Charles Schwab Foundation, Schwab Advisor Services has partnered with seven leading universities across the country, each with a financial planning program, to provide resources to develop tools, classroom infrastructure, and technology to support the development of world-class RIA talent on behalf of advisors.

In addition, throughout IMPACT, Schwab and the Foundation for Financial Planning will share updates on their partnership to raise funds for pro bono financial planning services for those in need, such as wounded veterans, domestic violence survivors, and families affected by cancer. To date, the campaign has raised approximately $450,000, requiring just $125,000 to reach the goal of $575,000 in donations by December 31, 2016. Clark, who is chair of the Foundation, encouraged IMPACT participants to help complete the campaign by pledging their support.

Advisors must shape their firms’ trajectories

Reinforcing with advisors that the future of the RIA industry is in their hands, Clark said, “Regardless of where you go with your business and how you decide to grow, you’re the future of this industry,” and added that Schwab, as the largest custodian, would help advisors navigate both the challenges and opportunities before them and will continue to invest and innovate on the industry’s behalf.

“We truly take pride in being champions of independence and of your future,” he said, closing with, “Everything we do in this business begins and ends with you, your business, and the future of this industry in mind. We believe that collectively, we can continue to leave a mark on the world by improving the lives of the people we serve.”

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.

About the Independent Advisor Outlook Study

The Independent Advisor Outlook Study is an online study conducted for Charles Schwab by Koski Research. The current wave — Wave 20 — represents the 10-year anniversary of the study, which was first conducted in 2007. Koski Research is neither affiliated with, nor employed by, Charles Schwab & Co., Inc. The sampling error is +/-3.2 percentage points at the 95 percent confidence level.

The study was conducted from Aug. 22 to Sept. 5, 2016, and reflects the responses of 957 RIAs whose assets are custodied with Schwab. Participation is voluntary. Respondents are offered the opportunity to sign up for a summary of the results. The survey length averages around 11 minutes. For this report, the majority of data is reported at the total sample level. When applicable, comparisons with prior waves of the study are made.

A detailed report on the Study, including additional findings about market and investing sentiment, and the regulatory environment, is available here.

Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading, and support of Charles Schwab & Co., Inc., (“Schwab”)

Independent investment advisors are not owned by, affiliated with or supervised by Schwab.

Follow @Schwab4RIAs #SchwabIMPACT for news and updates from IMPACT^® 2016

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