Taxes, alts, in the education spotlight at Schwab IMPACT

Education was one of the big themes at Schwab IMPACT in Boston this week, with a slew of sessions focused on advisor knowledge and the launch of a national RIA day to woo college students toward RIA careers.

Attendees at the event were keen to discuss education, highlighting alternatives and tax planning, in particular, as key areas for the advisory community. “A lot of advisors try to be tax consultants and tax planners, but there is an increasing need for tax expertise,” said Dave Whalen, executive vice president of strategic partnerships and head of M&A at Merit Financial Advisors. “Given the amount of wealth that's been created over the last 30 years, there's a greater need for tax expertise.”

Whalen explained that some advisors come to Merit with existing tax experience while others are seeking either a second opinion or help and resources. “Whether that is from people on our centralized planning team or from our custodial partners or from our investment management partners, Merit wants to be a resource for those advisors,” he said.

Brian Smith, co-head of Morgan Stanley’s Wealth Education Center also said that tax management is a key skills area for advisors, and another is alternatives and private markets. “Those two areas, in particular, I think, right now, require the most foundational education prior to implementation and adoption.”

For taxes, Smith cited complexity as one of the key reasons for this educational need. “Part of it is almost teaching financial advisors what are the sources of tax friction, where do taxes come from,” he added. “These decisions that we make within a client's construction of their portfolio have consequences from a tax bill - what tax management can do is put a client in better control of their tax situation.”

He explained that Morgan Stanley’s Wealth Education Center has launched a Tax Forward Investing Center, and an Alternatives Investment Center to help plug this educational gap. These contain a repository of on-demand courses. “They're continuing education for CFA, CFP, IWI, and CPA,” Smith said. “So an advisor can actually pull in the client's CPA and say, I want you also to watch this course to better understand some of the tools that I'm utilizing in the client's portfolio.”

Alternatives education was also in the spotlight at Schwab IMPACT.

Greg Weiss, head of wealth customized solutions at Goldman Sachs Asset Management told InvestmentNews that his company has invested heavily in multiple specialist groups around alternatives, models, SMAs, and ETFs. “These specialists have deep expertise with the sole purpose of educating RIAs and partners,” he said. “Our goal at Goldman is to be the advisor’s essential partner, and education is core to that.”

Advisor demand for alternatives is certainly increasing. Research released earlier this year by iCapital found that 89% of advisors are planning to increase their allocations to alternatives over the next 12 months.

Colin Falls, CEO of TAMP GeoWealth, said that the increased consolidation and scale of firms in the RIA industry is requiring more education around operational efficiency.

“I think what's so unique about the RIA industry is that the entrepreneurial spirit and independence, you're seeing this happen at such a fast clip,” he said. “The infrastructure isn’t keeping up with the scaling of these RIAs, so there needs to be education – how to grow the right way, how to think about systems, how to think about processes.”