This is a pivotal moment for the RIA industry. It’s undeniable that other types of advisors are trying hard to look like RIAs and capture their success. In the decade ahead, competition will be fierce, and running an independent RIA will involve more complexities than we’ve ever seen.

One way to gauge the changes in the industry is to look around at technology, the great “equalizer.” Companies such as Yelp, Zappos and Apple have been able to tailor products and services to meet the needs of shoppers. Technology has also affected client service. Consider Amazon.com. It began as an online bookseller and expanded into markets like food and clothing, growing and tailoring its services to meet an ever-changing client base.

Similarly, RIAs will need to evolve their services to address multiple generations of clients and their different needs. The opportunity here is huge. Ultra-high-net-worth investors will pass on an estimated $2.7 trillion to the next generation by 2050. Yet studies show globally a roughly 50% attrition rate for advisors in asset transfer between generations.

Though advisors should continue to address existing clients who value traditional approaches such as face-to-face meetings, they must also expand to reach younger clients—legacy clients’ children and emerging wealth groups—who are more mobile and demand new ways of communicating with their advisors.

The most successful advisors in this environment will be those making technology the backbone of their practices. Technology can not only help advisors reach out to this new generation but also help scale businesses and allow top companies to remain competitive in an increasingly dynamic environment.

But it also poses several challenges, one of which is the difficulty of making technology buying decisions. Advisors must also be able to integrate the increasing number of applications from a sea of providers. In fact, 57% of advisors tell Schwab that their biggest problem is simply picking the right software.

Just as many of us turn to online forums and Web sites when seeking advice about potential purchases, advisors must turn to similar resources, and these resources need to evolve.

Technology can furthermore become the equalizer for smaller firms, offering them the savvy that’s traditionally associated with large, national concerns. Don’t be surprised to find small advisors using online video chats, client customized Web portals, mobile apps and other communications tools. With these, small advisors can boast broader geographic reach, and that makes the importance of a “national brand” increasingly irrelevant.

Since it’s clear technology will be a foundation in all advisors’ future growth, it’s more important than ever that they plan for it, and know how they will get the most business efficiency and most robust client service from it.

Client Service
In the 2012 Schwab HNW Investor Study and Independent Advisor Outlook Study, we asked advisors why they don’t retain assets from their clients’ children. They told us it was by choice. They believed that those clients are too small or too difficult to serve with their existing service models. But the fact is that many advisors will need to modify their approach to client service to win this emerging business opportunity. If they don’t, they risk giving away all that business to their peers and competitors.

It’s clear, new groups of investors are growing in prominence and net worth. The advisors who embrace change now—just as the pioneers of our industry embraced change to create the RIA model—and commit to a robust, segmented service approach, will put themselves in the ideal position to capture the affluent investors of tomorrow.

Don’t Wait For Change
Given these challenges, the industry as a whole needs to raise its profile, especially to distinguish RIAs from those who aren’t. Who better to tell the RIA story than the advisors themselves?

Many of them certainly have an elevator pitch ready to sell their services to potential clients. But what about a pitch for the entire RIA industry? To continue to differentiate, advisors must spread the word about what it means to be an RIA and what the registered investment advisor can offer affluent investors—especially since the lines between RIAs and other types of advisory models have blurred in recent years. What’s more, the RIA industry is still young and is simply not as well understood as it could and should be.

Advisors can also find needed clarity with advocacy efforts focused on two main groups: investors and regulators. By helping investors recognize the key issues—such as what it means to be a fiduciary, what conflict-free advice really looks like and how advisors earn their fees—advisors set the stage for continued growth. Advisors who make efforts at the local level, augmented by initiatives such as Schwab’s “RIA Stands for You” program, can generate the education and awareness among the investing public that will be needed as competitors increasingly target the RIA space.

Certainly, the debate last year over a self-regulatory organization highlights the need for RIAs to be heard by regulators. I and others have met with congressmen in Washington, D.C., to help them better understand the RIA model and our perspective on this issue. This must be an ongoing effort as our industry grows and attracts more attention.

Advisors can and should advocate on key issues of importance at their local and state levels, as well as work with their financial institutional partners on a national level. In the end, I have no doubt that advisor interests, and those of their clients, will be best served if advisors play a role in shaping the future.

Built To Last: Creating A Legacy Firm
Great leaders leave a lasting impression on everyone around them. I’ve heard so many incredible stories from advisors who have spent their careers building trusted relationships with their clients. But what happens when, inevitably, those founding partners step away from the business? Advisors must determine whether they are going to create legacy firms that live beyond them. If so, they have a responsibility to not just grow their firms but also be good stewards of them. Firms have a responsibility to identify potential successors and start building capabilities in them that will preserve and build on their legacy. This will ensure that those successors understand the needs of current and future clients.

For many advisors, that responsibility must be addressed soon. According to Schwab research, nearly half (46%) of advisors who custody with Schwab are at least 50 years old. Since it can take from five to 10 years for founders and principals to execute a successful internal succession, time is of the essence for many in the RIA community.

Looking inside the company for potential successors is a natural place to start. Potential partners must be trained and developed from within over time so they transition smoothly to their new roles. Mentorship or executive training programs tailored to the RIA business, such as the executive leadership program Schwab announced recently, can help build capabilities and teach the realities of running an RIA practice to potential partners.

We also need new talent to continue to grow the industry. For our part, Schwab continues to make investments in universities to help cultivate the advisors of the future. By supporting individuals through internship programs and sourcing young talent straight from colleges and universities, we can set the stage for a successful transition of ownership down the road, and help to grow the ranks of the RIA community as a whole—creating a win-win for the advisors of today and tomorrow.

These efforts will take a commitment of time, of course. But it will be time well spent—as ultimately it is up to all of us, working together, to define the future legacies of our individual firms and the RIA industry as a whole.

The Future Of The Industry
The future will be defined as much by tougher competition and complexity in the marketplace as by huge opportunities for growth. Advisors who anticipate their clients’ evolving needs, take advantage of integrated technology, build a legacy for their practices and communicate the value of the RIA model will find themselves in a stronger position than ever—next year, and for decades to come.

Bernie Clark is executive vice president of Charles Schwab & Co. Inc. and head of Schwab Advisor Services, a leading provider of custodial, operational and trading support for nearly 7,000 investment advisory firms.