The current environment is a critical moment in time for the financial advice industry, and the most successful advisers will be able to embrace the changing terrain, according to Neesha Hathi, chief digital officer at Charles Schwab Corp.
“This is the time that it really becomes so powerful — I can't imagine a better time to be an RIA in some ways, because it really is a lot of things coming together and what we do matters,” she said, speaking at the Schwab IMPACT Conference Monday. “This is a powerful moment.”
Outside the rapid digital adoption amid the pandemic — which Schwab found that fastest growing RIAs embrace tech at higher rates — other notable trends create ample opportunity for advisers to grow their businesses organically, according to Hathi.
“There is an opportunity for advisers to leverage that human-centric DNA that they already have, leverage more technology, which they are already starting to do,” she said.
Top of that list is around financial wellness, which has not typically been a part of the adviser-investor conversation, according to Hathi. “This brings investors into the conversation around their financial lives a little bit more proactively then being dragged into it,” she said. “It creates a moment that we should all capitalize on where we can help our clients actually engage in their financial lives.”
Investor demand for an “uber-personalized” experience from their adviser is also a major industry trend that won’t go away any time soon, especially as ESG-investing continues to soar, Hathi said.
“Socially responsible investing and whether the performance is an issue or not, I think that debate will go on,” she said. “We do see the growth in that area, but if you step back and look at the data, most consumers have made a purchase decision based on a company that shares their values or that advocates for something that they care about — I imagine they want the same in their investing. That creates different expectations.”
Finally, the changing demographics trend is one to keep an eye on as younger investors have come into the marketplace in “droves” and have high digital expectations from their advisers, she said. “However, [young investors] before making a big decision really want that confirmed not only through technology, but through people as well. We have this whole new crop of investors who are learning investing earlier in their financial journey and we have to think about how we are going to serve them,” she said.
There is also a massive opportunity for advisers as $30 trillion in wealth is expected to shift into the hands of women by the end of the decade, Hathi said.
“As folks that are trying to serve these women who are making more of the financial decisions, are breadwinners — it really makes you think about what are the services and offerings that we need to have? That trend around demographics will shape the future of our industry, too.”
Ultimately, for Hathi, focusing on innovation with the basics can have a huge impact when capitalizing on the industry trends happening today, she said. “People like to talk about innovative things that are five years from now, but I think there’s a lot of innovation happening today with the basics.”
For example, if the industry can really become 100% paperless from start to finish, which is something advisers have struggled with, then that is a huge step for the industry, according to Hathi.
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