RIAs See Data Aggregation, Analytics As Big Client Service Enablers – Study

Tom Burroughes

29 June 2023

A Schwab Advisor Services' survey of 862 advisors and interviews with industry figures shows that more than three-quarters see data aggregation and analytical tools giving them a chance to improve client service. More than half said these areas can help them become more efficient.

The findings come from the Schwab Advisor Services’ Independent Advisor Outlook Study , which also showed that rises in assets is regarded as the top measure of growth, with 64 per cent of advisors giving this as their top barometer, while 43 per cent say the number of RIAs in the sector is a reflection of growth. Some 42 per cent of advisors say diversity of services that RIAs offer is a growth indicator.

One of the people quoted in the study, Kevin Keller, CEO of CFP Board, said: “One of the drivers of growth in the RIA space has been the desire of advisors have to provide more comprehensive solutions to their clients.”

Fieldwork for the study was carried out in late 2022, at the end of a year that saw equity and bond markets hit by rising US interest rates to curb inflation, and a process that also cooled some of the red-hot M&A activity that had been a feature of the RIA market in recent years.

The Schwab Advisor Services study found that growth makes many aspects of running a firm easier, but not everything. Maintaining company culture, for example, gets more difficult the larger a firm becomes. Other areas cited as challenges when firms grow is “maintaining growth momentum” and “deploying resources vis-à-vis workload.” The biggest gain that comes from growth is “attracting talent,” followed by “weathering a market downturn.”

On the technology and data front, the report said a “significant number” of RIAs are already taking steps toward using data to enhance the client-advisor relationship.

Close to half say they use data to identify the unmet needs of clients, with another 39 per cent saying they plan to do so in the next three years. Fifty-three per cent also say they’re currently tapping data to anticipate the ‘next best actions’ for serving their clients, and 35 per cent say they will do so in the next three years.

The quantitative survey, conducted from December 1 through December 15, 2022, polled 862 independent investment advisors who custody assets with Schwab Advisor Services, representing a total of $359 billion in assets under management . Participation was voluntary, Schwab said. Qualitative interviews were conducted with eight industry subject matter experts, three Schwab Advisor Services leaders, and five third-party participants.