Regulations will have the biggest impact on the advice industry over the next three to five years, according to a newly released poll of advisors by CoreData Research.
The online poll of 218 U.S. advisors was taken in November 2019 and found more than half (53%) believe regulation will have a “severe impact” on their industry over the next three to 5 years. This is followed by demographic change (50%) and technological innovation (49%).
U.S. advisors recognize that regulation, demographics and technological innovation “are structural changes that will reshape the advice industry in the years to come,” said Craig Phillips, head of International, CoreData Research, in a statement announcing the findings.
About four in 10 advisors say the low yield/low return environment (44%), geopolitical risk (44%) and fee compression (41%) will have a severe impact.
More than a third think volatility (39%) and the macroeconomic environment (35%) will significantly affect the industry.
Robo-advice/fintech (20%) and M&A/consolidation (10%) garnered fewer votes.
As to what the most important factor will be when it comes to the growth of their business over the next two to three years, advisors said it will be the ability to demonstrate value beyond investment advice/portfolio management (74%).
This is followed by capitalizing on the intergenerational wealth transfer opportunity (57%) and attracting younger clients (44%).
A further 44% say improving economies of scale to offset fee compression is important to business growth, while 37% cite the importance of implementing a digital strategy for clients.
The CoreData study also sheds light on what advisors want from asset managers. When asked how asset managers can help them over the next 2-3 years, the most popular option — selected by over half of advisors — is new risk management products and strategies (56%).
Informative educational materials (53%) and content including market commentary/updates (40%) complete the top three choices. “The appetite for new risk management strategies reflects elevated levels of uncertainty against a backdrop of heightened geopolitical risks,” Phillips said. “And the thirst for educational materials and market commentary underscores a desire to understand how these risks and uncertainties can impact portfolios.”
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