While registered investment advisors expect increased competition for assets and challenges from the Department of Labor’s fiduciary rule, these obstacles aren’t enough to deter advisors’ optimism.
According to Schwab Advisor Services’ “Independent Advisor Outlook Study” of 930 independent RIAs that custody with Schwab, three-quarters of advisors are “very optimistic for [RIAs] to grow in the next five years.” They expect the majority of organic growth to be driven by founders and principal-level equity owners.
At the same time, two in three expect increased competition for securing assets in this same timeframe and believe the need for differentiation is greater than ever. More than half of advisors expect difficulty in achieving clients’ investment goals, and confidence in S&P growth is at a four-year low. Only 56 percent of the advisors surveyed expect the S&P to increase in the next six months. Both advisors and their clients remain worried about market volatility, the interest rate environment and the possibility of another recession.
One in three are also worried about the DOL rule and that it will challenge RIA firms to distinguish themselves from the wirehouses. However, 57 percent of advisors also think the fiduciary rule will drive more questions and interest from clients about the role of a fiduciary advisor.
At Schwab’s annual EXPLORE conference on Thursday, Bernie Clark, the executive vice president and head of Schwab Advisor Services, said this interest in the fiduciary model presents an opportunity to advisors to tap into the $23 trillion in assets from high-net-worth families that currently reside outside of the independent channel.
“In this changing world, we believe investors can be better served by a model built on a foundation of trust and service,” said Bernie Clark, the executive vice president and head of Schwab Advisor Services.
To help educate investors about independent financial advice, Schwab is launching a new national advertising campaign in print and digital media outlets. The campaign also features an online content hub with a mobile-enhanced directory feature to help investors find and connect with an independent advisor in their region.