What You Need to Know
- Schwab's CEO, Walt Bettinger, said advisors should step up their personalization efforts for clients.
- Bettinger provided an optimistic forecast for the RIA sector.
- Advisors must be very careful how they use their client data, he also warned.
Despite ongoing challenges, there are significant opportunities for growth in the RIA sector, as long as advisors continue to not only offer value through personalization to their clients but also step up their personalization efforts, according to Charles Schwab CEO Walt Bettinger.
“Personalized investing is coming at all of us like a freight train,” he said Tuesday during the opening session of his company’s second-straight all virtual Schwab Impact conference.
After all, he told viewers: “The idea that I’m going to take my money and simply turn it over to some fund or an ETF and just trust that that manager or maybe trust that that index is going to invest the way I want” is no longer realistic.
“I won’t go so far as to say those days are gone … but they’re going to be challenged because technology is bringing the opportunity for personalization to everyone: to large investors, to medium investors, small investors and the whole range of RIAs also,” he explained.
What Your Peers Are Reading
Schwab is piloting a direct indexing program, Schwab Personalized Indexing, that it plans to launch in 2022.
The ‘Growth Engine’ for RIAs
RIAs have been offering personalization for many of their clients for a long time, Bettinger noted. But many investors today, he said, are “looking for an even higher level of personalization. Sometimes they want it from a social investing standpoint. Sometimes it’s to isolate off investments that maybe they’re overconcentrated in.”
And “we all want to be part of that freight train as it plows its way through the market,” he added.
Agreeing, Bernie Clark, head of Schwab Advisor Services, said: “Personalized service is a growth engine for RIAs” and it is “time for it to go full throttle.” We are seeing personalization “everywhere, in every industry,” he said.
“The standard for excellence is being close to your clients, being able to connect with them,” according to Clark. That, he said, “creates a wide-open highway of opportunity for RIAs because their value proposition has always been built on creating a personalized experience.”
The ‘North Star’ for Client Relationships
“Although it’s a competitive environment, I feel really confident about our ability to keep winning the talent wars and keep delivering quality people to support the growth of the RIA community,” Bettinger also said.
Despite the changes, “there’s three things that stand out to me that are timeless: values, trust and empathy,” he told viewers. “Values are really the North Star in a client relationship,” he said.
Meanwhile, “from an empathy standpoint, most successful firms understand that they need to meet their clients where their clients’ needs are,” he said. “It’s not a matter of stuffing a client into a certain business model. But, rather, it’s understanding that client’s needs and building your model around it.”