A recent survey from LIMRA and EY finds that the way things have been in the financial industry is changing — and so are industry assumptions.
The LIMRA-EY Experienced Financial Advisor Survey finds that all types of advisory businesses are experiencing growth, with 80% of respondents saying that they’ve seen significant increases in gross income over the last few years — and for half of respondents, it was because of an increase in the number of clients. In fact, overall, they saw a 22% increase over the last two years.
But with growth comes convergence, as competition stiffens and more practices have to offer more products and services to keep up with client expectations, as well as fee-based advisory services. And while life insurance used to be the major product line for insurance professionals, that’s no longer true; in fact, it makes up less than half their business, with annuities and investments, as well as other products, stepping up to fill the gap.
Respondents are relying more and more on digital tools, also thanks to consumer pressure; says the report, “Clients expect to interact with advisors in any media, anywhere, any time.” As a result, digital communication has also made inroads into prospecting as well as in ongoing client engagement.
And in keeping with satisfying customers, another change is in collaboration as advisors seek to manage increasingly complex customer needs, deal with multigenerational relationships and consolidate insurance and investment portfolios. A range of practice support professionals are now often engaged by both formal and informal arrangements to provide more comprehensive service, boost sales capacity and drive growth. More than 40% of respondents say they’re part of formal teaming arrangements with fellow sales professionals.
The great majority of advisors, 86%, expect to work within a tighter compliance structure, fiduciary rule notwithstanding; they’re adapting by, among other things, reviewing their use of index funds and annuities, as well as fee structures. That in turn is driving product manufacturers to address product design. In addition, 74% view it as an opportunity to offer more customized planning.
And clients aren’t the only ones with raised expectations. Advisors, too, expect more, and insurers have to keep up if they’re not going to lose business — particularly since advisors “place almost 60% of their insurance sales with their top life and annuity carrier.”
— Check out Top 6 Trends in Wealth Management: Chip Roame on ThinkAdvisor.