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June 29, 2020 at 05:08 PM
U.S. financial professionals expect their assets under management to increase by 7.2% over the next 12 months, with annualized growth of 17.2% over the next three years, Natixis Investment Managers reported Monday.
Nine in 10 advisors think this growth will be driven by new assets from new clients, and four in five say it will be driven by new assets from current clients. Only 55% are counting on market returns as a primary growth driver.
These findings were based on a survey of 300 U.S. financial professionals with $29 billion in assets, who were one segment of a global survey conducted by CoreData Research between March 16 and April 24 among 2,700 wirehouse advisors, RIAs and independent broker-dealers with $135 billion in client assets in 16 countries and territories.
Other findings from this survey were published June 16.
Despite their optimism for their practices, 84% of U.S. financial advisors acknowledged that business development was a challenge. Consider that in a typical work week, they dedicate a mere 9% of their time to prospecting for new clients.
Fifty-one percent of their time is spent meeting or communicating with current clients, 15% is divided between investing or reallocating client investments and 23% is devoted to general administration, marketing, compliance and education/reading/social media.
How, then, to grow their practices? The skills advisors said they most needed to improve on were:
- Getting to know clients’ next-generation heirs – 53%
- Preventing clients from making emotional investment decisions – 46%
- Demonstrating value beyond portfolio construction – 41%
- Managing client return expectations – 37%
- Communicating with clients – 28%
Asked why investors would leave their financial advisors, 69% of respondents cited failure to communicate with clients in a way they expected, and 64% said not listening to clients.
Only 27% put client departures down to a failure to meet their return expectations.
“Advisors are adapting their business to align with anticipated growth opportunities, and the path to profitable growth isn’t likely to follow the status quo,” Dave Goodsell, executive director of Natixis’ center for investor insight, said in a statement.
“To win assets, advisors need a keen understanding of how clients’ needs and expectations are evolving. At the same time, one of the most important roles for advisors is setting realistic expectations for their clients, and more actively planning to reach the goals of both the client and their next generation heirs.”
Planner, Financial Coach, Therapist
In the past, financial professionals succeeded by putting themselves forward as experts at selecting investments and managing client portfolios.
Today, the survey’s findings suggest, they are reframing their value propositions as clients seek a wider array of investment and non-investment-related services.
Sixty-one percent of U.S. advisors surveyed said that over the past year, they had seen increased demand for planning, especially for retirement income and planning.
Other services they said clients wanted more of were estate planning, tax-efficient investment and wealth structuring strategies, lending and credit solutions and help with financial education for other family members and heirs.
Seventy-two percent of respondents said they now viewed themselves as planners whose primary role was to help clients navigate all their financial needs, not just their investment portfolios.
