Schwab Independent Advisor Outlook Study Indicates Advisors Remain Optimistic Despite Challenges of COVID-19 Environment

According to the latest findings from Schwab’s Independent Advisor Outlook Study (IAOS), independent advisors are experiencing challenges in their businesses stemming from COVID-19 but remain confident in the industry’s continued long-term growth. The study was released today as independent advisors gathered virtually for Schwab IMPACT®, which celebrates its 30th anniversary this year.

More than 1,300 independent advisors responded to the study, fielded in August, and the overwhelming majority (91%) expect continued growth for their industry. Among the top growth drivers: preference for the independent model versus other models (64%) and robust platforms and technology that make it easier to go independent (20%).

“This year has challenged us as an industry and accelerated the pace of change, but independent advisors have demonstrated that they were made for this moment,” said Bernie Clark, executive vice president and head of Advisor Services. “At firms of all sizes, I have seen flexibility and resilience over these months of disruption and it all comes down to independent advisors’ unwavering focus on guiding and serving clients towards their goals no matter what life is throwing at them.”

While long-term optimism remains high, advisors have unquestionably felt an immediate impact from COVID-19 on their firms. While most advisors (82%) still expect growth this year, almost half (42%) expect lower growth in net new assets this year compared to original projections. The average expected growth rate in new assets by the end of 2020 is now 11%. Most growth (93%) will come from organic sources (existing and new-to-firm clients) versus inorganic growth (e.g., M&A activity).

Top business challenges due to COVID-19 include planning in an uncertain environment (36%), clients’ ability to use technology to connect virtually (35%), and achieving client investment return goals (32%). Moreover, both advisors (78%) and their clients (86%) are concerned about a continued recession through 2021.

Opportunity and long-term changes

Advisors see inherent opportunities due to COVID-19. More than half of advisors (57%) believe it has provided a greater opportunity to demonstrate client service and relationship focus. More than a third of advisors also cite opportunities to leverage technology to seamlessly work remotely, the ability to differentiate from competition, and the opportunity to develop better client relationships.

They also see lasting changes as a result of the current situation, especially a reduced need for office space (57%), distributed/remote staff (49%), and a continued virtual approach to business development and sales (44%). Almost half of advisors (47%) expect that the increased use of video-enabled meetings with client and prospects is a permanent change.

“Advice has never been more important than it is today,” said Clark. “As we emerge from this period of uncertainty, demand for the fiduciary model will remain strong, particularly among high-net-worth investors. This industry still has a lot of room to grow, and Schwab is going to be there to support all advisors’ success every step of the way.”

Recognizing a year of perseverance

In light of the significant challenges advisors have successfully navigated in 2020, Schwab dedicated its annual IMPACT Awards® program to acknowledging their incredible efforts during this time. Schwab is recognizing the entire community of firms at IMPACT with a $100,000 donation to the Boston Resiliency Fund.

“The passion, purpose, and commitment of independent advisors has never been so evident as in 2020,” said Clark. “We are thrilled to appreciate all of the advisors attending IMPACT as IMPACT Award winners in this unprecedented year. We also want to acknowledge IMPACT Award winners of the past 15 years for their leadership in getting the industry to where it is today.”

Since the debut of the IMPACT Awards in 2006, Schwab has recognized 52 firms and donated more than $800,000 on behalf of award winners. Information on past winners can be found here.

For real-time Schwab IMPACT® 2020 information and highlights, follow @Schwab4RIAs and #SchwabIMPACT.

About the Independent Advisor Outlook Study

The Independent Advisor Outlook Study (IAOS) is conducted for Schwab Advisor Services by Logica Research. Logica Research is not affiliated with nor employed by Charles Schwab & Co. Inc. All data are self-reported by study participants and are not verified or validated.

Current results reflect responses from 1,347 independent investment advisors who custody assets with Schwab representing a total of $513 billion in assets under management (AUM). The study was conducted from August 3 through August 16, 2020.

Detailed findings can be found at www.aboutschwab.com/research

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading, and support of Schwab.

Independent investment advisors are not owned by, affiliated with, or supervised by Schwab. For informational purposes only.

©2020 Charles Schwab & Co., Inc. (“Schwab”) All rights reserved. Member SIPC.

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Contacts:

Meredith Richard
Schwab Corporate Public Relations
646-343-7419
Meredith.Richard@Schwab.com

Sydney Layne
The Neibart Group
516-587-2384
sas@neibartgroup.com

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