Opportunities for relationship-based client interactions, the ability to directly contribute to the growth of their firm, and the potential for greater work/life balance draw RIA talent to industry, according to a survey conducted by Schwab Advisor Services examining the career paths of independent RIAs.

The RIA Talent Study examined the top reasons advisors selected a career in the RIA profession and what drew them to the space. The study also investigated certain characteristics of the RIA industry and the paths most commonly taken to become an advisor.

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Findings from four key areas in the RIA Talent Study include:

Becoming an RIA

  • One in three (32%) of the advisors surveyed first heard about a potential career in the industry from a colleague or friend. A combined two thirds report that their current position is their ‘second’ (43%) or ‘third’ (21%) career.
  • When considering their career options, more than half of the respondents report having looked at other investment-related firms (including wirehouses and brokerage firms) prior to choosing a position at an RIA firm.
  • This is particularly true of advisors under age 40. Thirty-five percent of advisors under 40 considered a wirehouse firm before working at their current RIA firm versus 26 percent of those aged 40 – 50 and just 11 percent of those over 60 years.
  • Prior to their current RIA role, approximately half of both men (55%) and women (48%) advisors held a position as an advisor at another financial services firm:
  • Women are more likely than men to have worked at other RIA firms (38% vs. 27%).
  • Men are more likely than women to have also had roles in sales (38% vs. 15%) and trading (35% vs. 16%), while women more often held previous positions in operations (34% vs. 17%) or administration (23% vs. 14%).

Being an RIA

  • The most important reasons reported for being an independent advisor include working for a smaller company (49%), greater work/life balance (47%) and greater earnings potential (41%). However, younger advisors (those under 40) also report being attracted by the opportunity to contribute to firm growth (55%) and the opportunity for greater career advancement (47%).
  • Three quarters of advisors (76%) indicate having a long-term commitment to the RIA industry, and the majority (58%) believes the profession offers more challenges and opportunities for growth and learning when compared to other types of models in financial services (wirehouses, banks).
  • When it comes to skills that drive success in their roles, a strong work ethic (44%), building and nurturing relationships (35%) and the ability to develop the business/grow clients and assets (31%) are considered to be the most important.
  • Women are more likely than men to emphasize the importance of building/nurturing relationships (46% vs. 33%) and being well-organized (32% vs. 19%).
  • Men are twice as likely as women to consider networking critical to success (16% vs. 8%).
  • Ninety-three percent of advisors indicate that improving the financial well-being of their clients is an important benefit of their RIA career. This is followed closely by having the authority to make decisions (81%), and having close and ongoing relationships with clients (79%). The majority of the advisors surveyed believe they are able to enjoy these outcomes in their current position .

Career Management

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  • Independent advisors report that their firm actively invests in, and provides support for, their individual career development.
  • This includes informal on-the-job training for the majority (70%) while fewer report access to formal in-house training (10%).
  • When seeking new advisor talent, networking is a dominant means by which firms find qualified advisors (60%), followed by cultivating talent from within (32%).

Recruiting

  • When it comes to recruiting policies that encourage a diverse workplace, 69 percent of RIAs consider the industry to be about equal with other types of financial services firms.
  • About half (49%) feel the RIA profession provides appealing career opportunities to a diverse talent pool versus other types of financial services.

"For today’s independent advisors, identifying, attracting and cultivating diverse talent who understands and values relationships is a strategic business imperative," said Hathi. "By understanding the career paths of advisors as well as the aspects of the profession that draw new talent to it, RIA firms can better prepare for and capture the many opportunities ahead."