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RIAs Optimistic About Growth Post-Covid Pandemic

By Alex Padalka June 9, 2021

Registered investment advisor firms are coming out of the Covid-19 pandemic with a more confident prospect for the industry as well as their own firms, while their client base is sometimes different from what they’re used to, according to a new report.

RIAs are more optimistic about the channel overall: 47% believe the channel will grow faster than the market, up from 33% who thought so in August of last year.

That's according to the findings of Charles Schwab​ survey of 953 independent investment advisors who custody assets with Schwab or the firm’s recently acquired TD Ameritrade Institutional, representing a total of $400 billion in client assets. The survey was fielded from April 13 to 26.

RIAs are even more optimistic about their own growth: 94% believe they’ll have growth in net new assets this year, by an average of 18% by the end of 2021, Schwab says.

Moreover, 92% of RIAs believe that the growth will be mostly due to organic growth from existing as well as new clients rather than mergers and acquisitions or new advisors joining their firm, according to the survey.

RIAs have some cause to be optimistic: in 2020, despite the uncertainty and restrictions caused by the pandemic, 50% of RIAs were able to add more new clients than in previous years, Schwab says.

At the same time, their new clients are in some cases different from the RIAs’ regular customer base. For example, 44% of RIAs report that the new clients are more technology savvy, 34% say they’re younger, 26% say they’re wealthier and 17% say they’re more diverse, according to the survey.

Advisors have tried to keep up with the times: 72% of respondents say they’ve become more flexible in adapting to change, while 56% have developed new workflows to meet client needs, and 28% were able to get to know their clients better, Schwab says. However, 33% also worked longer hours than normal to meet the client needs, according to the survey.

The pandemic has also resulted some RIAs being able to tap a wider pool of talent: 49% say they now find it easier to recruit employees from a wider geography, Schwab says.

One the other hand, 45% of respondents say they find it hard to access how prospective hires would fit with firm culture, although 31% also say it’s easier to hire more diverse talent, according to the survey.

Looking toward the future, 59% of RIAs believe that the main driver of innovation in the industry will be the technology industry, while 65% believe that innovation will come both from within the RIA industry and by adopting what takes place in other industries, Schwab says.

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Tags:  Finding and winning new clients , Client retention , Staffing and recruiting , Charles Schwab , TD Ameritrade Institutional , Schwab

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