While about 70 percent of independent investment advisors expect the S&P 500 to go up the next six months, 71 percent say they are somewhat or very concerned about the possibility of a downturn, according to a new study by Schwab.
Schwab’s Independent Advisor Outlook Study (IAOS), released this week at its IMPACT conference for advisors, also found that 82 percent of clients are concerned about a downturn. Advisors say tariffs on imported goods will have the most significant negative effect, followed by disputes over trade policies and the rising interest rate environment.
Further, about 72 percent of advisors said they had maintained transparency with their clients in the decade since the crisis, while 39 percent have emphasized their fiduciary duty.
Pointing to the industry’s trajectory of growth over the past decade, Bernie Clark, executive vice president and head of Schwab Advisor Services, cited the importance of independent registered investment advisors (RIAs) in helping investors out of the financial crisis.
“When clients were skeptical, you gave them confidence . . . when the pendulum swings, in either direction, your work matters . . . at a fundamental and a human level,” Clark told about 5,000 advisors at the IMPACT conference. “Fiduciary means something. You have demonstrated that for years, and there is no doubt you continue to set the standard for advice in the industry. When clients didn’t know what to do, you provided a path,” Clark said. “You not only saw clients through some of the scariest financial times in this country’s recent history, you were a refuge when trust was broken.”
The global financial crisis affected advisors’ in several ways. Specifically, 61 percent said it prompted changes in the use of technology, 48 percent said it impacted investment products, while 41 percent said it affected the frequency with which they communicate with clients. Also, 78 percent of advisors have maintained their pricing since the crisis, while 71 percent stayed the course with their investment philosophy.
The study also revealed that most independent advisors say differentiation is essential to their success. Further, 95 percent believe they are differentiated from wirehouse advisors in acting in a client’s best interest, while 84 percent said they are distinguished in understanding a client’s specific needs.
Additionally, 61 percent of advisors said compensation is considered the most important factor for attracting talent, followed by clear advancement opportunities (31 percent), and flexible scheduling (27 percent).
The Independent Advisor Outlook Study — conducted between Aug. 24 and Sept. 12 — polled 783 RIAs.