Financial advisors in a new study say they expect that 54% of clients will receive ongoing comprehensive planning advice in 2027, up from the current 48%, Cerulli Associates reported Thursday.
Many advisors offer financial planning as a core service, responding to rising market demand. Cerulli said this shift from standard investment management is being driven by clients' growing needs, technological advances and greater collaboration among advisors.
"Financial planning remains the primary way for advisors to engage with clients and compete with well-known online brokerage platforms," Cerulli research analyst Noah Serianni said in a statement.
"Investors have grown accustomed to fast transaction capabilities, easy-to-use interfaces and basic planning features, and expect the same from their financial advisors."
Retail direct providers have grown at a five-year compound annual growth rate of 14.3%, Cerulli notes. This compares with a five-year rate of 11.4% for all advisor-sold segments, including the rapidly expanding independent RIA channel.
Challenges and Benefits
Advisors in the study who deliver planning services cite several challenges in doing so. The main ones: Some clients find the process too tedious, shortage of staff capable of performing financial planning and clients' inability or unwillingness to invest the time to engage in the process.
At the same time, as financial planning becomes a core differentiator and practice feature, advisors cite these benefits of providing comprehensive planning services as the most important ones:
- Stronger client relationships, 83%
- Enhanced ability to help clients achieve their financial goals, 79%
- Increased client retention, 73%
They also cite the importance of the technology stack.
"Technology is a critical part of financial planning, particularly when engaging younger retail investors who are used to, and highly value, the easy-to-use online brokerage platforms on which they may have accumulated their assets," Serianni said.
He points out, however, that technology can pose difficulties for advisors. Fifty-eight percent of study participants reported that their financial planning technology lacks key features, functionalities or integrations.
Given the rapid expansion of the retail investor segment, Serianni says it behooves advisors of all sizes to segment and expand their capabilities to accommodate investors' growing expectations for comprehensive, tech-enabled financial advice.
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