A new study finds that longer client lifespans, information privacy/data integrity and changing workplace dynamics could impact advisors’ businesses the most over the next decade.
But not all impact is created equal, according to Schwab Advisor Services’ Independent Pulse study, which seeks to understand the dynamics shaping the independent advice industry with the goal of better understanding opportunities and challenges facing RIAs.
The study asked advisors to look beyond the immediate forces influencing the advice and wealth management space, and to consider six larger trends currently being navigated at the individual and societal level, including:
- increased human longevity;
- changing workplace dynamics (automation, changing job skills);
- medical advancements;
- information privacy and data integrity;
- artificial intelligence (AI); and
- climate change.
According to the findings, longer client lifespans and changing workplace dynamics are expected to have a mostly positive impact on firms, while information privacy/data integrity is expected to be mostly negative. And where advisors saw a positive impact for their business, they likewise saw positive implications for clients and, similarly, saw inverse results with respect to negative expectations for firms and clients.
Forty-four percent of respondents said they believe longer client lifespans will significantly affect their businesses, with 62% believing the impact of longer client lifespans will be mostly positive. Portfolio management and asset allocation were cited by 74% of respondentsas the top areas of their firm that will be affected by longer lifespans, followed by 67% who cited advice and 47% who cited firm growth.
Nearly 60% of advisor respondents believe information privacy and data integrity will significantly affect their businesses over the next decade. When asked why, 29% cite hackers as a threat, followed by 24% who cite this trend as the biggest risk factor for their business. Not surprisingly, the top areas of the firm that advisors believe will be affected included operations (88%), advice (30%) and firm growth (23%).
As to changing workplace dynamics, 43% of advisors believe it will significantly affect their businesses, with 63% believing the impact will be mostly positive. Cited as the top areas of the firm that will be affected included operations (75%), talent (55%) and firm growth (53%).
The study was conducted from Dec. 11-21, 2018, for Charles Schwab by Logica Research, among 778 independent investment advisors who custody assets with Schwab.
