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Life Health > Life Insurance

Optimism high among financial advisors

By Warren S. Hersch

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Most financial advisors are feeling optimistic about their ability to grow their businesses and acquire new clients throughout 2013, according to global asset manager Russell Investments’ latest quarterly survey of U.S. advisors, the Financial Professional Outlook (FPO).

The current iteration of the FPO survey includes responses from 251 financial advisors working in more than 100 national, regional and independent advisory firms nationwide. Russell Investments fielded the survey between May 2 and May 17, 2013.

Three in four (75 percent) advisors said in the May survey they are optimistic about the markets. That’s on par with the high levels of optimism the FPO survey reported in May of 2012 (76 percent) and May of 2011 (also 76 percent)

In the same May 2013 survey, 32 percent of advisors reported they believe clients are optimistic about the capital markets over the next three years — the highest proportion since the March 2011 FPO survey. In May of 2012, just 21 percent of advisors identified their clients as optimistic.

While advisors said the most popular topic of conversation they initiate with clients continued to be portfolio rebalancing (55 percent of advisors surveyed), concerns with government policy ranked second at 41 percent. In respect to conversation initiated by clients, concerns with government policy were the No. 1 topic of conversation (59 percent), a proportion matched only by client-initiated conversations about market fluctuations.

Nearly nine in 10 (87 percent) of advisors say they’re optimistic about acquiring new clients and households in 2013. Most indicated that they plan to leverage the same strategies used in 2012 to source new clients this year. Just 7 percent said they were uncertain about acquiring new clients; an additional 3 percent expressed pessimism.

The top three acquisition strategies that advisors pointed to for 2013 were receiving client referrals reactively (76 percent), referral prospecting through current clients (54 percent) and professional networking (43 percent). The least popular sources were the use of a business advisory board (2 percent), advertising (6 percent) and social media (7 percent).

Most advisors (66 percent) identify referrals as the reason they believe prospective clients are interested in meeting with them, along with dissatisfaction with the service of another advisor (65 percent of advisors) and investors no longer wanting to manage their own money (42 percent of advisors).

In 2012, 86 percent of advisors surveyed acquired more clients than they lost with nearly half (48 percent) indicating they brought on more than 10 clients or households. When considering business development goals for 2013, survey respondents appear confident in their prospects for continued growth, with the same proportion of advisors (48 percent) indicating they aim to acquire more than 10 clients or households, and another 30 percent targeting seven to 10 new clients.

In addition to acquiring new clients, most advisors report high levels of client retention, the survey states. The majority of respondents (55 percent) say they lost one to three clients in 2012, while only a quarter (26 percent) lost four or more clients. In identifying the primary reasons for losing clients, many advisors pointed to a cause beyond their control: a client’s death.

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