Schwab executives and independent advisors provided a positive take on the current state of the industry and a mostly upbeat forecast for it as well Tuesday during a media panel at the Schwab Impact conference at the San Diego Convention Center.
“Advisors continue to be optimistic about growth,” according to results from Schwab’s latest Independent Advisor Outlook Study that was released Tuesday at Impact, said Rob Farmer, managing director of corporate communications at Schwab.
The vast majority of advisors (92%) expect the industry will continue to grow and more than a third (37%) believe it will grow at a higher rate than the market, according to the study.
The study consisted of an online survey, conducted Sept. 9-23, of 942 independent investment advisors who custody assets with Schwab, representing a total of $366 billion in assets under management, the firm said.
While 55% predicted the RIA industry will grow at a slow and steady rate, 37% said the sector hasn’t fully matured yet and will continue to grow at a higher rate than the market overall.
Meanwhile, 94% of firms expect growth in net new assets over the next year, with organic growth expected to be the key driver by most of them. Fifty-one percent of net new assets are expected to come from new-to-firm clients and an additional 39% from existing clients, according to the study.
There’s a wide range of measurements that “advisors are knocking it out of the park on,” Bernie Clark, executive vice president and head of Schwab Advisor Services, told reporters. “In reality, advisors don’t attrite a whole lot of assets. They retain those relationships,” he said, adding much of the growth “they’re seeing is happening organically and it’s coming through referral.” And many of the clients who are referred to them tend to continue using the same advisors, he noted.
Despite the mostly upbeat forecast, Clark conceded there are challenges on the horizon for advisors. For starters, “there’s some worry now about the market and it has been pretty volatile since really the fourth quarter of last year,” he pointed out. The concern is “probably a little bit more [on] the client side … than the advisor side,” he noted. “But there’s still a long game, and so they’re not panicking” too much about the situation, he said.
However, a “slight generational divide is starting to be created” in which some of the younger clients are “a little bit more anxious than the boomers even at this point,” he said, noting members of the most recent generations, including Generation X and millennials, tend to be “a little more careful” than older clients when they start investing.