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Markets are up. Advisor confidence isn’t

SAN DIEGO⁠ — Even as markets hit record highs, advisors are increasingly concerned about the potential for a U.S. economic recession, according to a recent Charles Schwab survey of independent planners. At the same time, however, they express growing optimism about the outlook for the RIA industry.

More than nine in 10 advisors said they believe their profession will grow steadily or faster than the market at large, according to a survey of 942 independent investment advisors who custody with Charles Schwab. Yet planners’ fears about a downturn are on the rise: About 65% said they are apprehensive about a possible recession.

That’s up from 49% six months ago.

“There is some worry now,” said Bernie Clark, head of Schwab Advisor Services, speaking on a panel at the firm’s Impact conference. “The market has been pretty volatile and we’ve seen the ups and downs."

Adding additional services is one way advisors may be able to attract more assets, Clark said. At Schwab, lending and other banking products are already in the works.

“Banking is naturally a coming together,” Clark said. “There was a point in time when not every individual was involved in the financial services world. That’s changed.”

As technology democratizes wealth management and allows new clients to access financial services, it’s only natural for them to ask their broker-dealers to handle additional banking services. “Our intent ⁠— and it has been for quite some time ⁠— is to help create some of those synergies,” Clark said, adding that RIAs frequently expressed the need to offer banking products to clients.

“Last time I checked there are two sides of the balance sheet, assets and liabilities,” said Anthony Christensen, managing partner with Access Wealth Management, during the panel discussion.

Clark did not give details about possible products or fee structures and left the door open as to whether the firm would build the technology, buy it in an acquisition or partner with a third party. “Integration of advisors, and their experiences, along with the banking experience is something we’re working on right now,” Clark said. “We think it's going to be critically important.”

Roughly, one third of advisors will make an investment in technology in the next three years, said Andrew Salesky, senior vice president of Digital Advisor Solutions at Schwab. Advisors say they want to improve the speed of their services, reduce errors and drive efficiency.

“Technology is prominent,” Salensky said.

While new banking technologies hold the most promise for advisors, tech adoption is still a real concern. The biggest barriers to adoption include client resistance, cost and a lack of employee adoption, according to the survey.

“Adoption can be a barrier and it’s something we have focused on,” said Bernie Clark, head of Schwab Advisor Services.

However, it’s not just clients who are somewhat resistant to new technology. Employees of advisory firms have also been slow to adopt, Clark said.

“As humans, we don’t love change,” Christensen said. “We get comfortable and familiar. You may have to take a little extra time to learn the processes. Investors are focused on the long term and sticking to the plan, and tech [adoption] ties into that very nicely.”

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