The winds may shift, but not the need for financial advice

Data can be key to navigating a down market

Perspective by: Lisa Salvi, Managing Director, Business Consulting and Education for Schwab Advisor Services

A rising tide raises all boats. That's certainly true. But, when the seas are choppy and uncertain, how can we be sure the tide is rising? 

Like any good navigator, the best RIA (registered investment advisor) firms rely on tools to help them measure their position and heading. They have instruments to tell them which way the wind is likely to blow. Data and deep expertise are the map and compass of the modern RIA. 

Today, the instruments are telling us that there may be silver linings to the stormy seas ahead.

Three indicators that investor demand for what RIAs have to offer is growing

1. Volatility can drive demand

Schwab's 2023 Outlook pointed out that most wage pressure and layoffs have been tied to goods or services that benefitted from the pandemic and are now having to scale back. This sector-level readjustment combined with a more volatile market environment is a shift that could create an even greater need for financial advice and services.

The trend of high market volatility experienced last year is likely to persist during 2023. This type of environment can induce feelings of uncertainty and fear – qualities that often lead to poor financial outcomes.

RIAs have a leg up. Given the deeper relationships they build with their clients, they are uniquely suited to help investors navigate swings in market conditions, along with the emotions that can follow in their wake.

This is one way we know that the future is bright for our industry regardless of the weather.

2. Organic growth is trending upwards

No matter the market conditions, firms focusing on what they can control – such as organic growth – is key. In last year's RIA Benchmarking study, assets from both existing and new clients were at a five year high1. Organic growth is an important factor to track because it's a more controllable indicator, regardless of market conditions. It reflects how well a firm's value proposition, client experience, and strategies are resonating with clients. 

This is a clear indication that firms are controlling what they can control and are seeing strong outcomes. Investors are increasingly seeking out help with their financial futures and RIAs are positioning themselves superbly to provide that help.

3. Demand for talent mirrors client growth

Another demand indicator has emerged from the available data from last year in that recruiting talent was the top strategic initiative for firms2, beating out even client acquisition. This is the first time this has happened in the 16 years we've been fielding the RIA Benchmarking Study.

In fact, our research estimates that to keep up with growth rates the industry will need to hire more than 70,000 new staff over the next five years. This is in line with other credible sources we watch, such as the U.S. Bureau of Labor Statistics, which projects the financial advisor profession to grow 15 percent from 2021 to 2031, much greater than their 5 percent projected average for all occupations.

Hiring and retaining the best talent is no easy feat– so, how can a 70,000-person talent gap be cause for celebration?

The answer is simple: demand for talent is growing because demand for financial services and advice is growing. Firms are reaching out to find new employees because they have more clients than ever and need the best and the brightest to build trust and serve them. Yet another big indicator that the tide is indeed rising.

Lighthouse on the edge of a seashore

How firms navigate a strategic path forward

Having the right data can make the difference when you're faced with key business decisions.

A way to gain valuable insights for navigation is to look at good data from where you've been as much as what's to come. We've found that some of the best information comes from learning what courses other firms have charted and then seeing how well they fared.

One of our biggest tools for gathering meaningful data is the RIA Benchmarking Study. It's the longest running study in the industry and the most comprehensive look at the RIA industry. It's a key barometer for what is top of mind for advisors, including the issues that are affecting their business and compensation data from thousands of employees.

If you're a client, we're excited to invite you to join in and take advantage of the deep insights and concrete measurement it provides to participants. A large area of focus for the 2023 study will be investment strategies.

If you're not a client, whether you custody with someone else or you're just thinking of taking the leap to independence, you'll find a lot in our high-level results to help evaluate where you stand amongst your industry peers and to understand the best practices of Top Performing Firms3.

In either case, we believe in the power of consulting and education to support firms of all shapes and sizes and we'd love to talk to you. 

Whether stormy or calm, up markets or down, the investment advisor sector is an important employer and a vital contributor to the entire financial industry. Being armed with enough information to guide your clients is critical - with the waves so unpredictable, more so now than ever.

What you can do next

  • Participate in the 2023 RIA Benchmarking Study. It’s open through March 15. Log in to start the study.
  • Get an inside look at the Benchmarking Study and how you can turn data insights into business strategies.
  • Consider a custodian that invests in your success. If you're thinking about becoming an independent advisor, contact us to learn more about the benefits of a Schwab custodial relationship.


1. Based on median results for the period from 2017 through 2021. Assets from existing clients excludes investment performance. 2022 RIA Benchmarking Study from Charles Schwab, fielded January to March 2022. Study contains self-reported data from 1,218 firms.
2. Results for all firms with $250 million or more in AUM that selected initiative as a top 3 priority. 2022 RIA Benchmarking Study from Charles Schwab, fielded January to March 2022. Study contains self-reported data from 1,218 firms.
3. Top Performing Firms are those that rank in the top 20% of the Firm Performance Index. The index evaluates all firms in the study according to 15 metrics to arrive at a holistic assessment of each firm's performance across key business areas.

Past performance is not an indicator of future results.

The RIA Benchmarking Study from Charles Schwab contains self-reported data from advisor firms that custody their assets with Charles Schwab or TD Ameritrade. Schwab does not independently verify or validate the self-reported information. Participant firms represent various sizes and business models.

Charles Schwab & Co., Inc. ("Schwab") is a separate but affiliated company and subsidiary of The Charles Schwab Corporation ("Charles Schwab").

TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.