Every advisory firm must evolve or die, Clark says.

The latest Schwab Independent Advisor Outlook Study (IAOS) found RIAs reporting growth in new clients, compensation and wallet share since the bull market began.

A whopping 93% of the 629 RIAs surveyed believe the industry is on a “continued growth trajectory,” while 53% said the industry will continue to grow at a faster rate than the market. Respondents reported high employee retention rates, hiring plans and technology investments to maintain their growth, with their top talent acquisition priority being adding staff in operational and support roles.

While other studies found that only a minority of advisors have a formal succession plan, 30% of IAOS respondents reported that they offer equity ownership opportunities to their staff, and nearly half (49%) said they have a documented path to ownership.

Bernie Clark, head of Schwab Advisor Services (SAS), said in an interview that the findings reflect the progression of RIA firms from “being entrepreneurs with practices” into real “enterprises — so they need a delineation of responsibilities,” including, for example, chief operating officers and chief compliance officers, responding not just to mandated regulation (CCOs) but also to their size.

“They’re trying to make sure they’re scaling” those enterprises, Clark said, focusing on adding human capital in areas like operations but also actual capital in technology, allowing them to “be more efficient exponentially.”

Despite that good news and optimism, Clark said these same advisors should beware of complacency. Yes, “advisors have been wildly successful,” but across industries older-model firms and even newer-model firms are either “evolving or dying.” Like traditional but successful firms, advisors “can become outdated instantly,” turning into “new traditional firms.”

He urged advisors to participate in “the next wave of technology.” While “we know the wirehouses will never go away,” Clark said “their allure is not what it was. Advisors need to be the next new model,” not the older “traditional.” In the near future, he said “even Uber will look like an old model.” Bringing in the next generation of advisors will help take the industry “in another direction,” Clark said, and using automated investment technologies (aka robo-advisors) like Schwab’s Institutional Intelligent Portfolios (released earlier this week) “is just the beginning.” 

When asked if regulators and legislators understand this change in business models — ride-sharing services like Uber have faced steep opposition from entrenched interests like taxi fleet owners — Clark mentioned that Schwab had recently been advocating in Washington for the RIA model. “We were there (in D.C.) a couple of weeks ago. They [regulators and legislators] have a very traditional view.”

While Clark said “we’re big fans of good legislation,” changes in circumstances, and business models, should change the traditional regulatory and legislative view of providing financial advice. “Things happening now” in Washington “will have a long-lasting impact” on the industry, he warned.

In a nod to the wirehouses’ prodigious lobbying dollars, Clark said that “the traditionals know that they’re losing” in both market share and investors’ preferences, and are “trying to drag back” regulation to preserve their model.

On the survey findings, Clark was particularly pleased that 57% of respondents said they were committed to a more a diverse work force. “Clearly the next generation is going to be more diverse,” and potential clients among millennials want to see that diversity reflected in their advisors. “People want to work with people who look like them,” whether in gender or ethnicity or races. People in advisory firms “need to look like their clients; they need to diversify and come down in age.”

The IAOS survey had responses from 629 RIAs representing $229 billion in AUM custodied with Schwab.

— Check out Sonders, Gross, More: What to Expect in Second Half of 2015 on ThinkAdvisor.