Independent advisers have their eyes on the future, and the future they see is bright — despite technology developments that could throw new competition in their way, according to the results of a study released Monday by The
Charles Schwab Corp.
Seven in 10 independent advisers surveyed are “very optimistic” about opportunities to expand their businesses despite expecting more competition for new assets over the next five years, according to a
study of 821 Schwab-affiliated advisers.
The results of the study indicate that it is a particular industry segment — small independent wealth management firms — that is being turned on its head. The changes are being catalyzed by the technology-driven demands of clients and a wave of competition created primarily by the Internet.
In a major shift, independent advisers — whose competition today is primarily other regional firms — expect online-based firms and expanding national practices to be a top competitor within five years. Nearly half of advisers expect online advisers to be one of their top three competitors for assets in five years, and advisers expect online personal finance sites to be as robust a competitor as wirehouses, with a quarter selecting either as a top competitor in four years.
Fewer than half of advisers see broker-dealers, national RIAs or wirehouses – the four massive brokerages run by Bank of America Corp., Morgan Stanley, Wells Fargo & Co. and UBS AG – as a top competitor today.
The new competitive landscape for advisers is being driven in part by the changing face of clients. A majority of advisers say the next generation will increasingly value independent firms and be more directly involved in decision making than clients today. Perhaps as a result of their desire to be more self-directed, clients will need more education about investing, a majority of advisers said.
Advisers remain unsure how technology will affect how they work with clients. Asked to predict how clients in one to two decades would see advisers, only 36% of advisers said they expect clients will want to meet face-to-face in the same way they do today. The plurality of advisers, 44%, have no idea what clients will expect and need out of advisers in the future because technology is changing so quickly.
Two in 10 advisers say their clients will want “anytime/anywhere” access to advisers through platforms like Facebook and Skype. But only 4% of advisers say online marketing accounts for their new business today.
Researchers surveyed 821 independent advisers between Sept. 30 and Oct. 4 for Schwab's Independent Advisor Outlook Study, which has a 3.21% margin of sampling error. The majority of advisers responded on behalf of their firm, and the average firm managed $176 million in assets for 130 clients.
