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Despite Volatility, Advisor Confidence High

Despite Volatility, Advisor Confidence High

The market volatility in the third quarter wasn’t enough to shake advisor optimism.

Nearly every one of the 638 RIAs surveyed in the latest Independent Advisor Outlook Study, which Charles Schwab released during its annual IMPACT 2015 conference, expects their firms to grow during the upcoming year.

Half of all advisors surveyed expect 5 to 10 percent growth, 32 percent anticipate 11 to 20 percent growth, and 15 percent project more than 20 percent growth.

This is in spite of the fact that nearly every advisor surveyed said they had to reassure their clients through stock market drops.

Although 97 percent of advisors agree there will be continued market volatility and a negative impact from geopolitics and global markets, confidence in the S&P 500 Index is at the highest point in three years. Sixty-seven percent of advisors think the Index will increase in the next six months.

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That’s not to say advisors expect completely smooth sailings. The most-cited obstacle to growth was a more complex compliance environment. Establishing internal processes, balancing client services needs with business operational needs, and technology integration were also frequently named challenges.

“This is a growing, maturing industry so the changes and challenges advisors face are good ones to have,” said Bernie Clark, executive vice president and head of Schwab Advisor Services. “Awareness of the underlying opportunities is also key, as is responding strategically and proactively."

RIA firms see technology as having a greater impact on the industry than changing demographics, according to the study, and 68 percent named technology adoption as central to their operational strategy.

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“It’s about scale, efficiency and operational effectiveness,” said Jon Beatty said, the senior vice president of advisor services at Schwab, adding that it’s no longer just about automating the back office. Advisors are also trying to improve the client experience with “robust, thoughtful and purposeful web presence, use of mobile technology, and web casting.”

The study found that advisors are also warming to robo-advisors. Three-quarters of those surveyed said they would now recommend automated investment management services to some clients, usually for clients who don’t meet asset minimums, have relatively simple investment needs, or are the children of existing clients.

The survey also indicated that acquisition, development and retention of talent is the top driving force for change at RIAs.

“Any fast growing industry is going to need talent to grow,” Beatty said. “We certainly see our advisors thinking about acquiring talent, retaining talent, and their talent with the firm.”

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