What You Need to Know
- Sixty-nine percent of advisors say they have a strategy in place to continue to grow at their current rate or faster.
- The top growth driver is acquiring new clients.
- Portfolio personalization is increasingly important to investors, according to Schwab's Jon Beatty.
The independent advisory industry can look forward to continued growth over the next five years, according to a study released Wednesday by Schwab Advisor Services.
Ninety-three percent of RIAs surveyed said they expected growth to continue, with a projected 17% uptick in terms of the average net new assets expected per year over this period.
Sixty-nine percent of advisors reported that they had a strategy in place to continue to grow at their current rate or faster. The top growth drivers: 64% said acquiring new clients, and 57% said attracting new clients who began investing in the past 18 months.
They plan to do this through a combination of working with clients to reach the next generation, increasing use of technology, recruiting younger advisors and offering new solutions and services.
Thirty-six percent of advisors said they expect growth to come from building relationships with centers of influence and driving referrals, and 34% from growing relationships with current clients.
Logica Research conducted the online study from Oct. 12 through Oct. 28 among 723 independent investment advisors who custody assets with Schwab or TD Ameritrade Institutional, representing a total of $291 billion in assets under management.
Although most firms in the study are optimistic about growth prospects, the findings show that firms emphasize different levers to achieve it.
Some focus on organizational structure, attracting and retaining talent, and anticipating skill sets essential to supporting growth that they will need for the future.
Others will make investments in sales and marketing to actively create strategies to meet target client needs.
Still others will target client personas, creating strategies to meet clients’ needs, and identifying specific client segments for expansion.
Fifty-two percent of study participants believe that investors are looking for added personalization in their investment portfolios over the next five years.
Thirty-eight percent said millennial clients will lead the way among those seeking personalization. Twenty-six percent predicted that baby boomers would lead the way, 22% said Generation X would do so and 10% said it would be Gen Z.