How can wealth advisors prosper at this critical time when clients are expecting much more than just investment advice and advisors' margins are being squeezed?
That's a key question posed by a new study conducted by the CFA Institute in conjunction with market research firm Scorpio Partnership that surveyed wealth advisors — both chartered financial analysts and non-CFAs — and private wealth clients, revealing critical gaps between the two.
The headline takeaway: "The future wealth client will be much more demanding, discerning and wants the advisor to showcase how they're adding value," says John Bowman, the institute's managing director, Americas.
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"The traditional advisory business is at risk," says Bowman. "There's an urgent call to action to reshape the business to address a new generation of clients, digital substitutes and other sources of advice. The easy days are over [for wealth advisors] to win and retain business."
The study, which surveyed 1,370 wealth advisors (including 892 CFA charterholders) and 4,000 affluent and high-net-worth individuals, found big gaps between what advisors believe clients need and want and what wealthy individuals desire from advisors now and in the future.
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For example, advisors believe transparency and competitiveness on fees as well as non-investment advice and enhanced digital access will be the key factors wealthy individuals consider when choosing a wealth manager in the future, but that "grossly" underestimates other factors that are important to clients, especially those under 55 years old, according to the study.
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