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What Advisors Expect From Markets, Clients in 2020 and Beyond

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Independent financial advisors don’t always sing the same tune as their clients, according to a new study from Independent Advisor Solutions conducted by SEI.

The survey of 400 advisors, including both advisors who work directly with clients and those who do not, finds only 14% believe improving the investor experience is a top goal for 2020. Moreover, only 1% cite changing their fee framework as a priority in the year ahead.

At the same time, 32% of advisors expect to customize client experiences, based on client needs, over the next five to 10 years, and 26% anticipate segmenting clients by the size of their assets and needs over the same time frame.

“While advisors have acknowledged the need to adapt the client experience in order to survive in the future and meet evolving investor demands, our research shows the strategy to do so remains an elusive target today for most advisors,” said John Anderson, head of Practice Management Solutions at Independent Advisor Solutions, in a statement.

“Despite this, advisors seem optimistic, yet somewhat cautious about the future and the prospects it may bring,” Anderson explained.

Almost half of survey respondents, 45%, believe it will be easier to grow their business over the next five to 10 years despite geopolitical and market concerns, but 18% say the use of robo and hybrid advisors by younger investors poses a challenge to business growth.

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Twenty-seven percent of advisors surveyed expect a market downturn in 2020, and 42% expect a decline in 2021. Both forecasts are more bullish than last year’s survey expectations, in which 77% anticipated a market downturn over the next two years (including 33% who expected a decline in 2019). 

The U.S. stock market rallied and is poised to end 2019 with its biggest gains in six years. Just minutes before the end of the last trading session for the year, the S&P 500 was up  28%; the Nasdaq, 35%; and Dow Jones Industrial Average, 22%.

Geopolitical uncertainty remains the top market concern for advisors and clients, according to SEI. Sixty-four percent of advisors cite this concern, which includes the impeachment of the U.S. president and the upcoming presidential election, Brexit and the U.S.-China trade war (though tensions tied to this conflict appear to be softening).