At the same time the overall amount of investable assets grows, there is an oncoming shortage of advisors to help Americans invest those dollars. That was the message of the first speaker at the Insured Retirement Institute’s Marketing Forum held Thursday in New York City.
Lisa Dolly, CEO of Pershing LLC, a BNY Mellon company, said that due to population growth and other factors, the amount of new investable assets grows by $850 billion every year. The good news for the industry is that the holders of those assets will seek advice and demand for financial planning services is set to rise, Dolly said.
However, the advisor population is aging (the average age is 51), there are fewer broker-dealers, and the major wirehouses have curtailed recruitment efforts, which means there may be a shortfall before the industry meets the projected goal of 237,000 new advisors over the next decade, Dolly said.
Those entering the advisory field will meet new challenges as well, such as having the tech solutions that meet the desires of Gen X and Gen Y, she added. The financial services industry must also make doing business easier, like the banking industry has done. She demonstrated this by depositing a check using her smart phone during her speech.
Another trend she highlighted was the movement toward fee-based advisory services, which will have a significant impact on how products are designed and distributed. “You cannot ignore this trend,” Dolly said. “How well does your product integrate into advisory accounts?”
Though she noted a fee-based platform could eliminate commissions, Dolly said she wasn’t sure “it would go that far.”
As the baby boomers move into retirement, they will shift from accumulation to decumulation, Dolly said. Again, this represents a huge opportunity for the financial services industry since these shell-shocked investors will likely seek financial advice and products that are safe and secure, since many are concerned about outliving their assets and worried about the future of Social Security.
Despite the low interest rate environment that has forced insurers to pare down benefits, “an annuity delivers what an investor wants today,” Dolly said.