SAN DIEGO -- While advisers have a “rich opportunity” to capture a healthy share of an estimated $23 trillion wealth market, they also face a daunting challenge: How to get clients to pay for new value-added services.

As commoditization of investment management increases, advisers will increasingly define their value by their relationships with clients and “getting into more aspects of their clients lives,” Bernie Clark, head of Schwab Advisor Services, said at a briefing at the Schwab Impact conference.

Schwab executives (l. to r.) Jon Beatty, Ed Obuchowski and Bernie Clark described their optimism about the future of the planning industry at the Impact conference in San Diego.

Advisers will increasingly employ “life management” services including more complex planning beyond portfolio management, Clark said, echoing comments made by Schwab CEO Walt Bettinger at the conference’s keynote session. Advisers are poised to become “psychologists for their clients,” Bettinger said.

Speaking alongside Clark, Jon Beatty, senior vice president for Schwab Advisor Services, added that he saw advisers becoming more involved in clients’ lives outside work, helping them with a variety of lifestyle decisions.

The problem, Clark said, is that most advisers charge based on a percentage of a client’s assets under management, but actually managing investments represents only approximately 25% of the fee’s value.

Three-quarters of an adviser’s value may be for non-investment services, Clark said, "but there is no discreet charge for that. [How to charge] for those services hasn’t been figured out yet.”

Even more value-added services are on the horizon, Clark predicted. “It will be interesting to see how they will be monitored in the future,” he said.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access