At Schwab Impact, First Conversations Focus on Election and Profits

The theme of the 2016 Schwab Impact conference is “Join the Conversation,” including the kinds of conversations taking place at the conference itself and those an advisor should be having with clients.

In a four-day gathering (counting the preconference sessions) that features top-level speakers like Malcolm Gladwell, Ian Bremmer, Jeff Gundlach and even Magic Johnson on getaway Thursday, the tone of the presidential election campaign and the results of the November 8 voting took center stage on Monday.

Greg Valliere of Horizon Investments, a perennial curtain-raiser speaker at Impact, attracted more attendees than usual in his presentation Monday afternoon at the San Diego Convention Center, with his remarks on the foibles of the candidates and the after-effects of the election on advisors and their clients eliciting concern and laughter from the audience.

Jon Beatty of Schwab introduced the preconference markets-and-politics session with reminders of the health of the RIA market but also the challenges the independent advisor faces, and was followed by Jeff Kleintop who explored the dangers and opportunities in the markets, especially the global outlook.

Beatty, senior VP at Schwab Advisor Services, lauded independent RIAs for their growth, saying assets under management in the RIA channel have grown 12% annually over the past 10 years, compared to wirehouse assets growing only by 3% a year over that same time. In addition, the size of advisory firms is growing, with Beatty saying that the number of RIA firms with more than $1 billion in AUM has grown 74% while the number of RIAs with between $100 million and $1 billion in assets has grown 67%. Finally, the health of the industry is shown by “your 97% client retention rate,” he said, citing Schwab’s most recent RIA Benchmarking report.

But, Beatty asked, “how do you differentiate amid the winds of change?” At a time when “your clients’ lives have become more complex,” and when “you’ve set the standard” for meeting those needs, “what’s next?” Beatty then suggested that one possible differentiator for RIAs is to deliver to clients what he called “life style management,” providing advice and direction to clients on everything from health care to faciliiating generational wealth transfers to offering executive relocation services and “retirement downsizing” guidance.

While many RIAs are CFPs or CFAs, Beatty wondered if there might be a new designation that arises in the near future that helps investors not just protect their wealth, as wealth managers do today, “but enjoy their wealth.”

Beatty then introduced Kleintop, Schwab’s chief global investment strategist, who addressed what he called a “sleeper” positive development that may occur soon along with the markets and economic dangers over the longer term.

Asking if this is a “good time to buy,” Kleintop said that individual investors, the “800 pound gorilla” of the markets have so far “concluded no,” they may be about to change their minds. While “without your help investors chase performance,” when investor behavior has turned around and they’ve decided to buy into the stock market the markets have soared in response.