As advisors face growing downward pressure on their bottom line, many are seeking new strategies and solutions to help them stay competitive, whether it’s turning to digital client tools or offering hybrid pricing solutions.
Despite their search for efficiencies, our latest research shows the majority of advisory firms and practices still choose to rely on their in-house competencies for investment management services. What’s driving this perception of an in-house investment advantage?
Our latest study, The Race To Scalability 2020, surveyed over 500 advisors, including RIAs (33%), independent broker-dealers (35%), hybrid/dually registered RIAs (13%), regional broker/dealers (8%), and insurance broker/dealers (6%), to learn more about advisor attitudes in this space.
As part of our 10-year commitment to this research, we analyzed how advisors decide whether and how to engage external support to grow their firms.
Over the past decade that FlexShares has done this study, the percentage of advisors opting not to engage external managers (60%) has remained remarkably consistent. They’ve often maintained that investment management is core to their firm’s value proposition or key to client relationship building.
However, it appears these traditional industry perceptions are changing.
Our latest research confirmed a continued decline in the share of advisors who view investment management as their primary business proposition. As the industry shifts from a focus on investing to more holistic financial planning, advisors are seeing greater value in a broader range of activities.
In fact, only 33% of respondents told us that investment management research was their primary business proposition. Slightly higher than 32% in 2018, but the percentage has been on an overall decline — from 54% in 2012, 56% in 2014, 44.6% in 2016.