The registered investment advisor community tripled its assets between 2011 and 2021, and yet there’s a lot more room for growth, according to Jon Beatty, chief operating officer at Schwab Advisor Services.
“Cerulli continues to project that this part of the industry will eclipse the market share of the wirehouse channel in just five years,” he said Tuesday during the opening remarks at Schwab’s IMPACT 2023 conference, which is being held in Philadelphia this week. “The advised market in the U.S. was $31 trillion at the end of last year, and the RIA channel had just $8 trillion. By my math, that sounds like a $23 trillion opportunity for all of us.”
The shape of the industry continues to evolve, and people are noticing, he said to the nearly 5,000 attendees at IMPACT, more than 2,500 of whom were advisors.
“Everybody wants into this space. It's amazing to see the multiples that companies are paying just to get a foothold in this channel,” he said. “At times, it feels like our industry is evolving day by day, headline by headline. But what I admire most about all of you is your fiduciary mindset as you are focused on your client's needs through all of this change.”
Advisors, he continued, are the people who understand why it’s important to deliver an experience tailored to each client.
“In order to meet those ever-evolving needs and free up time that can be spent in client relationships, we see you leaning more into outsourcing and streamlining,” he said. “It certainly makes sense to me, because to differentiate and grow advisors need to be front and center in the client relationship as the value creator.”
And that value creation isn’t just with the client’s assets, but with the advisory business itself. Advisors who want to go independent have more options today than they’ve ever had.
“Last year, RIA starts were down 40%. Now that's a headline that can make you squint or scratch your head, but with context, the picture changes,” he said. “RIA joins were up 45% last year—an increasing number of advisors joining an existing RIA as a preferred path to independence.”
The acceleration of the breakaway advisor trend within the independent and hybrid channels is very, very real, he said, adding that this fluidity is like nothing he’s seen before.
“I believe it's going to have long-reaching implications to the talent trend that we've been talking about for the last 10 years,” he said. “It's about independence on your terms. It really is why our space is the most vibrant, the most dynamic, and always on the cutting edge.”
And RIAs are going to need all of that energy and resiliency, he said, to deal with the forces that are changing businesses and impacting clients, such as war, unstable global financial systems, inflation, interest rates and the economic outlook.
“But there is so much that is squarely in our control, like understanding the clients beside us, the change around us and the leadership opportunity in front of us,” he said. “Your firms were built for a time like this.”
Beatty said he expects artificial intelligence to have far-reaching implications in the personal and professional lives of advisors, but he also expects RIAs to deliver the advice and solutions that will help their clients be resilient and capitalize on all this change.
“You’ll have new capabilities as you lean into these new technologies to support the growth and the scale of your businesses,” he said. “The ecosystem surrounding this industry will no doubt continue to deliver new ways to help you differentiate yourselves and your firms and create an outstanding personalized experience, balancing between human and digital touchpoints. That's what's going to drive success in the future.”