Independent registered investment advisors say women and members of Gen X and Gen Y will be the driving forces behind advisory firms’ profitability five years from now, according to a new study by Charles Schwab Advisor Services released Wednesday.

But advisors also say they are now focused on current clients rather than recruiting the next generation, says the Independent Advisor Outlook Study.

According to the study, 65 percent of the 1,000 advisors surveyed acknowledge that the next generation of clients will drive business in the future. However, an almost equal number (67 percent) identify asset growth as a top priority now with that growth being driven by high-net-worth clients, baby boomers and retirees.

“Positioning their firms for sustainable long-term growth means RIAs have to balance the demands of running a successful business today with the need to make investments and take proactive steps to attract and meet the needs of the next generation of clients,” says Bernie Clark, executive vice president and head of Schwab Advisor Services.

“RIAs have significant opportunity with the clients who are right here, right now,” he adds. “But they also have to keep their eyes on how best to navigate the unchartered territory that lies ahead – it is a delicate but important equilibrium.”

In considering how to attract the next generation, 95 percent of advisors say they are interested in pursuing relationships with their clients’ children, but 33 percent do not think the children have enough assets to be profitable. Another 31 percent say the children often live in a different geographic area, and 30 percent say the children want to choose their own advisors.

Seventy-seven percent of advisors believe the next generation of investors will expect an “anytime-anywhere” service model, Schwab says. An almost equal number of advisors believe they will need to spend more time engaging with both spouses in households.

“RIAs must start to plan strategically for a generation of clients who will be very different from their parents in terms of values, needs, behaviors and expectations,” says Clark.

Because of growing competition among RIAs, 72 percent of advisors are placing a greater focus on differentiating their firms from others, and 71 percent see branding as becoming more important.

Given the strong relationship-based nature of RIA firms, finding the right talent is critical to the independent model and to attracting the next generation of investors, Schwab says. Advisors surveyed believe they need to hire more diverse (55 percent) and younger (46 percent) advisors, but two out of three advisors acknowledge challenges with finding and retaining quality staff.

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