Claiming the next generation of clients and standing out from the crowd are very much on advisors’ minds – but they’re still grappling with how to deal with those two critical issues.

Advisors are “well aware of the growing importance of the next generation of clients to their businesses,” according to the semi-annual Independent Advisor Outlook Studyreleased Wednesday by Charles Schwab Advisor Services.

While 65% of advisors say women, Gen X, or Gen Y will be a driving force in their firm’s profitability five years from now, advisors are “more actively focused on existing clients and more immediate growth opportunities,” according to the study, which was based on a survey of more than 1,000 RIAs.

About two-thirds of advisors identify asset growth as a top priority for their business in the next few years, with firm profitability now driven by high-net-worth clients (68%), boomers (62%) and retirees (61%). Only 14% cited finding the next generation of clients as one of their top business priorities today.


Hiring younger advisors is critical to attracting a new generation of clients, Bernie Clark, executive vice president and head of Schwab Advisor Services, tells Financial Planning.

“We see again and again that one of the top criteria for choosing an advisor is that people want to feel comfortable,” he says. “And people feel comfortable when they see people who look like themselves.”

Advisors acknowledge they need to hire more diverse and younger advisors to attract a new generation of clients, but two out of three say they have found it challenging to find and retain quality staff, the study finds. Identifying people with the right skills and experience was the biggest hiring problem, followed by training new employees, advisors say.

Advisors also need to treat younger clients differently, and cater to their expectations of communicating online and interactively, Clark says. More than three-quarters of the advisors surveyed believe the next generation of advisors will expect an “anytime-anywhere” service model, and nearly half (48%) think younger clients will be “much more active” in their investment decision-making than baby boomers.

While nearly all advisors surveyed express interest in pursuing relationships with their clients’ children, they also cite barriers to achieving that objective. Approximately a third of advisors didn’t think their clients' children had enough assets to be profitable for their firms; they were also concerned that the children would want to choose their own advisors and often lived in a different geographical area.


In the wake of increased competition from new RIA firms entering the market and other types of advisor firms trying to emulate the RIA model, 72% of advisors surveyed are placing a greater focus on differentiating their firms from others, and 71% said branding was becoming more important.

“Differentiation is a major concern,” says Clark. “It used to be about being different from traditional models. But with more RIA firms, advisors are starting to worry about their peers. They’ve increased their services, adding offerings like bill pay, life planning and coaching. And they’re going to have to continue to extend themselves.”

The survey also found that three-quarters of investors reported being “extremely or very confident making investment decisions in collaboration with their investment professional rather than making these decisions all by themselves.” 

Yet clients and advisors differed substantially when asked to gauge their confidence in achieving investment goals. 

Almost half (47%) of investors believed it will be “extremely or very easy for their primary advisor to achieve their investment goals in the current market environment.”  However, the same percentage of advisors said that in fact they thought achieving their clients’ goals will be “difficult.”

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