Broker-Dealer and RIA Executives’ Top Concern: Innovation

Fidelity poll finds need for innovation amid shifts in investor behavior, technology and ‘operational pressures’

A new Fidelity Investments poll taken at the company’s annual executive forum finds that broker-dealer and RIA executives believe the greatest concern for the industry today is “increasing competition and the need to differentiate.” 

Underlying this sentiment are a number of changes in investor behavior, shifting business pressures and evolving technologies that are challenging brokers and advisors “to renew their focus on innovative services and strategies in order to remain relevant and position themselves for growth,” according to the company.

The greatest change on the investor landscape, according to two-thirds (64%) of the executives surveyed, is that investors are more risk averse. Possibly as a result of their lower risk tolerance, executives reported that the next most significant shift is that investors are more engaged in the investment process (12%). The need for greater transparency and a desire for increased communication through e-mail, text and social media were tied as the third most significant changes in investor behavior (at 7% each).

“We’ve consistently heard from our clients that mounting operational demands, the rapid pace of technology change and evolving investor dynamics make it difficult to focus on innovation,” Michael Durbin, president of Fidelity Institutional Wealth Services, said in a statement. “This year’s executive forum was dedicated to giving our clients that critical ‘time to think’—to help them renew their focus on innovation and better plan their growth strategies.”

While investor behavior has changed, executives’ business realities have also shifted, the survey finds. Compared with 10 years ago, they are spending 73% more time and resources on risk and compliance. This is causing them to spend less time and fewer resources on marketing/business development (19% less) and client service (10% less).

The executives polled are dedicating, on average, four hours per week to the topic of innovation, which is less than half the time they would like to devote to thinking about new ideas for their businesses. 

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