{"id":21457,"date":"2024-02-26T21:54:28","date_gmt":"2024-02-26T21:54:28","guid":{"rendered":"https:\/\/www.thinkadvisor.com\/2024\/02\/26\/7-emerging-challenges-for-advisors-and-how-custodians-want-to-help\/"},"modified":"2024-02-26T21:54:28","modified_gmt":"2024-02-26T21:54:28","slug":"7-emerging-challenges-for-advisors-and-how-custodians-want-to-help","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2024\/02\/26\/7-emerging-challenges-for-advisors-and-how-custodians-want-to-help\/","title":{"rendered":"7 Emerging Challenges for Advisors, and How Custodians Want to Help"},"content":{"rendered":"
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The war for market share among advisor custodians is one of the hottest conflicts in wealth management today, with trillions of dollars at stake for all parties involved \u2014 the custodians, the advisors who rely on them to safeguard client assets, and their collective clients.<\/p>\n

But at a recent industry event, several of the biggest names in RIA custody came together to highlight the biggest issues to watch. L<\/span>eaders from custody giants Charles Schwab, Fidelity and Pershing, as well as relative newcomers Goldman Sachs and Altruist, appeared on stage at the National Association of Personal Financial Advisors, or NAPFA, Large Firm Forum, which took place last week near Phoenix.<\/span><\/p>\n

\u201cTheir growth and our growth are tied together, and it felt in listening that we really are partners, despite our different set of needs,\u201d advisor Cheryl Holland said of the custodians in an interview after the panel discussion. <\/span><\/p>\n

\n\"A Cheryl Holland (right), a CFP and founder of Abacus Planning Group, moderated the panel. Speakers included Brad Losson (left), managing director at Charles Schwab; Richard Lofgren, managing director at Goldman Sachs; Jason Wenk, founder and CEO of Altruist; Angie Popek, SVP and regional managing director at Fidelity; and Ben Harrison, managing director at BNY Mellon |Pershing. Credit: Victoria Zhuang
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Holland, a CFP and founder of Abacus Planning Group, moderated the panel. Speakers included Brad Losson, managing director at Schwab; Richard Lofgren, managing director at Goldman; Jason Wenk, founder and CEO of Altruist; Angie Popek, SVP and regional managing director at Fidelity; and Ben Harrison, managing director at BNY Mellon |Pershing.<\/span><\/p>\n

Schwab leads the pack in RIA custody, according to an industrywide survey of 2,917 advisors <\/span>published earlier this month<\/span><\/a> by T3 and Inside Information. The study found that Schwab occupied around 38% of the RIA market, followed by Fidelity, Pershing, SEI and Altruist, and then several other firms including Goldman, respectively. <\/span><\/p>\n

Advisors who custody with the Big Three, especially at Schwab and Pershing, were most likely to say they planned to either move custodians or add another one. (<\/span>Schwab, Fidelity, SEI and Altruist were all among the <\/span>sponsors of this year\u2019s NAPFA conference<\/span><\/a>.) <\/span><\/p>\n

The event was targeted for fee-only fiduciary advisors, whose firms generally had at least $1 billion in assets under management, or were approaching that in five years, or had at least 20 employees. <\/span><\/p>\n

Here are seven emerging challenges facing advisors \u2014 and how custodians want to help.<\/p>\n

1. There\u2019s a massive shortage of next-gen advisor leadership.<\/h2>\n

Lofgren said what concerned him the most was the problem of bringing in younger talent to help with succession as the industry\u2019s aging workforce approaches retirement. <\/span><\/p>\n

If advisors can\u2019t find enough qualified talent, more may be pushed to sell their firms, Lofgren said. \u201cWe look across the industry, the average age of advisors is 49 years old. What are we doing to bring in the next generation?\u201d he said. <\/span><\/p>\n

A <\/span>2022 Schwab study<\/span><\/a> found RIAs would need to hire over 70,000 employees, assuming no departures, over the following five years to maintain their pace of growth, Losson said. <\/span><\/p>\n

Schwab is investing in young talent sourcing and matching to aid RIAs in long-term growth, he said. \u201cWe\u2019re active in college and universities, endowments and grants, and trying to help create that talent pipeline for all of you \u2026 I know my colleagues here are active as well,\u201d he said of the other panelists.   <\/span><\/p>\n

2. Training new talent is an issue, and custodians want to help.<\/h2>\n

Fidelity is offering practice management, benchmarking studies, tech, \u201cthought leadership\u201d and consulting resources, Popek said, to help advisors with talent development and capacity building once they make that hire. <\/span><\/p>\n

It also launched an \u201cRIA staffing tool,\u201d Popek said. The tool helps advisors \u201cso that you can measure your staffing levels and productivity versus your peers and make informed hiring decisions.\u201d  <\/span><\/p>\n

\u201cThink about diversity in your hiring approach so that your associates are representative of the clients that you\u2019re serving now and in the future,\u201d Popek said. <\/span><\/p>\n

She added that more firms could benefit from sourcing talent broadly \u2014 drawing from career changers, veterans and boomerang workers who are returning to the workforce after caregiving or another career break.  <\/span><\/p>\n

\u201cSome firms are even getting creative and thinking about part-time solutions as they look to attract some of these associates,\u201d she said. <\/span><\/p>\n

3. Advisors are stalling on organic growth.<\/h2>\n

Frequent headlines about inorganic growth in the industry mask an unsettling reality of sluggish organic growth for many practices, the panelists said. <\/span><\/p>\n

\u201cThe vast majority of firms are not growing significantly. Organically, it\u2019s low single-digit growth,\u201d Harrison said.  <\/span><\/p>\n

4. Advisors need to outsource more.<\/h2>\n

Advisors are often distracted from spending time productively with clients, Harrison said. To outsource non-client-facing work, Pershing is investing in \u201chuman capital\u201d staffing to support advisors, as well as productivity tools, he said. It generally focuses on firms with $1 billion or more of AUM. <\/span><\/p>\n

Goldman Sachs also positions itself as outsourcing support, targeting RIAs moving upmarket. Its custody arm sells bespoke solutions to advisors whose clients have \u201csignificant\u201d net worth and want to invest in more diverse asset classes like alternatives, Lofgren said. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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