Advisers investing in technology to prepare for possible recession, Schwab study finds

Advisers investing in technology to prepare for possible recession, Schwab study finds
No. 1 priority is tech that will help them serve more clients.
JUN 20, 2019

Financial advisers are worried about a potential downturn or recession and to prepare for the storm they are investing in technology, according to the latest Independent Advisor Outlook Study from Charles Schwab Advisor Services. Two-thirds of the 924 independent advisers surveyed are concerned about the possibility of a prolonged market drop. Half are concerned about an extended economic contraction. Yet most advisers remain bullish about their own five-year growth projections thanks to strategic investments they believe will promote growth regardless of market conditions. About 94% of advisers expect to grow, at an average rate of 41%, over the next five years by attracting new clients and increasing current wallet share. (More: Two fintech firms providing tools for uber wealthy clients) Technology is playing a significant role in their plans. About 98% of advisory firms plan to invest in new technology in 2019, according to the Scwab survey. Firms with more than $500 million in assets under management are more likely to make the investment, with 70% planning to add new technology in 2019 compared with 53% of smaller firms. "With the prospect of a downturn looking, advisers remain laser-focused on their clients, while they continue building scale and driving efficiency within their firms," said Bernie Clark, head of Schwab Advisor Services, in the report. "Growth is non-negotiable for many advisers, and their goal is to thrive no matter what the markets may bring." Advisers' top priority for technology is increasing the number of clients they can serve. Reducing manual work, focusing on high-value tasks and security were also stated goals for bringing on new technology. Firms with less than $500 million in AUM are particularly concerned with boosting security, according to the survey. (More: Pershing's incoming CEO sees opportunity in high-demand advisory services) The study also found advisers are streamlining operations and increasing sales and marketing efforts to prepare for a possible downturn.

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