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Financial Planning > Charitable Giving > SRI Impact Investing

Passive Investing a ‘Great Way to Free Up Time’: Schwab’s Clark

By Emily Zulz

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Does an increased appetite among investors for passive investing products represents an opportunity or a threat to RIAs?

According to the results of the latest Schwab Independent Advisor Outlook Study, released during the Schwab Impact conference, more advisors are actively thinking about passive investing as an opportunity.

The Independent Advisor Outlook Study is an online study conducted from Sept. 6 to 17 among 946 advisors employed by independent investment advisor firms, whose assets are custodied at Schwab.

According to the study, 66% of those surveyed said they view the increased appetite among investors for passive investing as an opportunity, versus 34% who view it as a threat.

“Passive investing is a great way to free up time – to spend on planning, to spend on life choices, to spend on coaching and other areas,” Bernie Clark, head of Schwab Advisor Services, said during a press briefing to discuss the study results at Schwab Impact.

The study asked those advisors that have an opportunistic view of passive investing why they think passive investing strategies could be an opportunity for RIAs.

According to the study, these advisors say passive investing allows them to offer more value-added services and better manage their clients’ performance expectations.

Half said that “a greater reliance on passive investing frees up my time to provide clients with value-added services that fall outside the realm of traditional portfolio management.” A large portion (41%) feel that matching the performance of an index will help clients have more reasonable performance expectations, and relieve some pressure advisors feel.

And another large portion of advisors (39%) said passive strategies present an opportunity to engage a wider pool of potential investor clients.

Susan Chase Korin, chief compliance officer and owner of Balasa Dinverno Foltz LLC, said during the same press briefing that her firm has long used passive investing.

“We incorporated passive investing in our philosophy for decades,” she said, adding that there’s “more opportunity for us as passive (investing) becomes more popular.”

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