A Look Inside the Minds of RIAs

Schwab says the study is based on a first-of-its kind survey of nearly 600 advisers, who were asked about their career paths and their perceptions of what it is that attracts advisers to the RIA approach to financial services. Advisers polled for the survey suggested a variety of factors played into their decision to go independent, especially relationship-based client interactions, ability to contribute to firm growth, and potential for greater work/life balance.

“By understanding the career paths of advisers, as well as the aspects of the profession that draw new talent to it, RIA firms can better prepare for and capture the many opportunities ahead,” explains Neesha Hathi, Schwab Advisor Services senior vice president. “Our study results indicate that independent advisers indeed value the attributes that have become the industry’s hallmarks.”

Hathi also points to encouraging survey results showing younger advisers are being drawn to the RIA profession for many of the same reasons as their older counterparts—and to take advantage of what Schwab calls the “tremendous growth opportunities present in the RIA industry.”

Becoming an RIA

Schwab says about one in three (32%) of the advisers surveyed first heard about a potential career in the RIA industry from a colleague or friend, and most advisers working as RIAs had other jobs first. A combined two-thirds report that their current position as an RIA is their second (43%) or third (21%) career.

When considering their career options, more than half of the respondents report having looked at other investment-related firms (including wirehouses and brokerage firms) prior to choosing a position at an RIA firm. Schwab researchers say this is particularly true of advisers younger than 40. Thirty-five percent of advisers younger than 40 considered a wirehouse firm before working at their current RIA firm, versus 26% of those ages 40 to 50, and just 11% of those older than 60.

Prior to their current RIA role, approximately half of both men (55%) and women (48%) advisers held a position as an adviser at another financial services firm. Women, however, are more likely than men to have worked at other RIA firms (38% vs. 27%). Men are more likely than women to have also had roles in sales (38% vs. 15%) and trading (35% vs. 16%), while women more often held previous positions in operations (34% vs. 17%) or administration (23% vs. 14%).

Being an RIA

Schwab’s poll found the most important reasons reported for being an independent adviser include working for a smaller company (49%), greater work/life balance (47%) and greater earnings potential (41%). However, advisers younger than 40 also report being attracted by the opportunity to contribute to firm growth (55%) and the opportunity for greater career advancement (47%).

Three quarters of advisers (76%) indicate having a long-term commitment to the RIA industry, and the majority (58%) believes the profession offers more challenges and opportunities for growth and learning when compared to other types of models in financial services.

When it comes to skills that drive success in their roles, RIAs commonly cite a strong work ethic (44%), a solid ability to build and nurture relationships (35%), and the ability to develop the business/grow clients and assets (31%). Women are more likely than men to emphasize the importance of building/nurturing relationships (46% vs. 33%) and being well-organized (32% vs. 19%). Men are twice as likely as women to consider networking critical to success (16% vs. 8%).

Ninety-three percent of advisers indicate that improving the financial well-being of their clients is an important benefit of their RIA career. This is followed closely by having the authority to make decisions (81%), and having close and ongoing relationships with clients (79%). The majority of the advisers surveyed believe they are able to enjoy these outcomes in their current position as an RIA, Schwab says.

Career Management

Independent advisers report that their firm actively invests in, and provides support for, their individual career development. This includes informal on-the-job training for the majority (70%), while relatively few report access to formal in-house training (10%). When seeking new adviser talent, Schwab says networking is a dominant means by which firms find qualified advisers (60%), followed by cultivating talent from within (32%).

Recruiting

When it comes to recruiting policies that encourage a diverse workplace, 69% of RIAs consider the industry to be about equal with other types of financial services firms. About half (49%) feel the RIA profession provides appealing career opportunities to a diverse talent pool when compared with other types of financial services.

“For today’s independent advisers, identifying, attracting and cultivating diverse talent who understands and values relationships is a strategic business imperative,” Hathi says.

Complete results from the Schwab RIA Talent Study can be downloaded here.