Advisors are optimistic that the RIA industry will continue to grow, and the bulk of that growth will stem from existing and new clients, according to a study by Schwab.

But despite the rosy outlook for industry growth, the possibility of a recession is top of mind for a majority of both advisors and clients. Sixty-five percent of advisors and 83% of clients anticipate a possible recession, the study found. This represents a jump from May, when only 16% of advisors and 20% of clients were thinking that way. And 40% of advisors are worried that they may not be able to reach client goals in this environment. 

Schwab’s “Independent Advisor Outlook Study,” now in its 12th year, seeks advisors’ opinion on numerous topics—the outlook for their firms, the state of mind of their investor clients, perspectives on the investment landscape and other issues important to them and the industry.

Fifty-five percent of advisors asked believe the RIA industry will grow at a slow and steady rate, while 37% said growth will continue at a higher rate than the market. Sixty percent of advisors believe growth will be driven by investors’ preference for the independent model over other models.

Moreover, the study found that a large majority of firms (94%) expect growth in net new assets over the next year, with a 20% growth on average.

With growth expectation, advisors are mindful of technology. Thirty-six percent chose it as a leading consideration for investment and change next year. Operations and workflow also factor in with 32% naming these items, while 24% of those surveyed have their sights set on changing their client acquisition model.

It’s clear from the study that advisors see the benefits of technology helping them with faster service (named by 72%) and a reduction in errors (58%) and allowing employees to focus on more complicated tasks (named by 51%).

But the study noted that there is resistance from clients. In fact, technology is the main barrier at 42% of firms surveyed to implementing new technology for client service. Twenty-nine percent of advisors said the cost of implementing new technology relative to the time or money saved also hinders that implementation. And staff resistance rounded out the top three reasons at 17%.

In addition, the study found that staff resistance to implementing new technology is more than twice as likely at larger firms than at smaller ones, 18% to 8%, respectively.

In other findings, 60% of advisors expect to see an increase in the number of clients who spend most of their time outside of their geographic area, and 27% believe more employees will work remotely. It should be noted that the responses are reflective of advisors from large firms.

The study also touched on millennials’ views on investing. Baby boomers and Gen Xers said they mainly seek out advisory firms because of the people and relationships. Millennials, however, said they seek out a firm because it serves family members. Millennials also said a firm using technology was important to them. Boomers and Gen Xers did not list technology among their top three reasons.

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