A majority of advisors are optimistic about the future of the financial industry and most say their firms will grow in the next few years, but finding the talent they need is a top challenge to seeing those predictions come true, according to a new Schwab survey..
More than one-third (37%) of RIAs surveyed for the Schwab Advisor Services’ 2022 Independent Advisor Outlook Study said finding talent is a problem. Training and managing the new employees acquired through a talent search and deciding how to fairly compensate them also were problems cited by some, but the percentages of advisors worried about these issues were much smaller.
Two-thirds of firms said they have a clear strategy to help add the talent shortage, the survey of 723 independent investment advisors who custody assets with Schwab or TD Ameritrade Institutional showed. Talent continues to be both a strategic opportunity and an operational challenge for firms. Almost all (92%) advisors reported that their talent strategy reflects the needs of their current client base, and 74% said they are hiring today to ensure that they have the skill sets they need for tomorrow.
As an added strategy to attack the talent shortage problem, half of the advisors said they are looking outside the financial industry for new hires. They are looking in areas such as sales, communications and technology. Among the top five attributes sought are work ethic, attention to detail, team player mentality, ability to communicate with clients in person, and commitment to the firm.
“We all have many things constantly vying for our attention, not to mention so many options for managing our finances,” Jon Beatty, managing director and Schwab Advisor Services’ chief operating officer, said in the report. “That is why the relationship between advisors and clients is so critical. By keeping the attention of clients and engaging with them, the relationship itself helps drive growth. It is people who sit at the heart of these valuable relationships.”
In other findings, the survey showed that personalizing advice and financial plans is growing in importance for clients. More than half of advisors said they believe investors will be looking for added personalization within their investment portfolios over the next five years.
Of the clients who will ask for more personalization, the advisors said, millennials will lead the way, followed by baby boomers, Gen X and Gen Z.
The advisors said they will be looking for new ways to build relationships with next-generation clients, and they want to develop better tools and approaches to assess clients’ needs and values as part of delivering more personalization, the survey said.
Many RIAs are looking for new investors to help the firms grow. Nearly all (93%) of the RIAs surveyed of all sizes said they see growth in their futures for the next five years, with a projected uptick of 17% of the average new assets expected per year over this time period. The top reported growth driver will be acquiring new clients, and 57% said they are targeting new clients who began investing in the past 18 months, the survey said.