New Forces Dramatically Impact Financial Advisors

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The Future of the Financial Advisor Cogent Reports

Regardless of the uncertain fate of the DOL fiduciary ruling, one thing is certain: it unleashed new forces that will dramatically impact financial planning and advice for years to come. With many advisory firms and product manufacturers far down the road in adapting their strategies and communicating these changes to clients, it would be shortsighted for firms to fully reverse course now.

We already see advisors changing their business practices. As advisors move further toward fee-based compensation, predominantly fee-based advisors and RIAs are the only advisor segments that are growing. As a result, we’re seeing advisor-controlled assets gradually shifting toward lower-fee investment products. Compounding the challenge for asset managers, advisors are becoming less receptive to traditional wholesaler outreach and are instead seeking more personalized, on-demand support.

Advances in technology are enabling advisors who are receptive to these new tools to be more efficient and effective in competing with automated investment advice services by offering their clients a more holistic view of their financial health. As the value of the traditional advice model is called into question, investment firms have an opportunity to help advisors demonstrate their worth. For active managers, it’s a chance to promote their common interests with advisors through highlighting the benefits of an actively managed portfolio over the long term and under varying market conditions. Value-added services, building upon perceived firm strengths and targeted to advisors’ specific needs, offer opportunities to strengthen advisor relationships. Advisors seeking guidance in particular areas, such as portfolio construction considerations in an increasingly complex environment or other financial wellness services outside of investments, will require increased access to specialists in those areas.

Even in light of these mounting challenges, few advisors appear anxious to exit the business. We’ll continue to monitor how advisors react to the shifting regulatory environment, potential market changes, advances in technology, and evolving client expectations through two rounds of follow-up tracking this summer and in Q4 of 2017.



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Meredith Lloyd Rice

About Meredith Lloyd Rice

Meredith Lloyd Rice is a vice president in Market Strategies' Syndicated division. She manages the firm’s syndicated research products focused on the financial advisor market and is the lead author of the Advisor Brandscape® report. She has more than 15 years of experience managing research initiatives in the wealth management industry and has explored a wide range of business issues on the client and supplier side. Prior to joining Market Strategies, Meredith was an associate VP at Chatham Partners where she oversaw a team of researchers and managed the overall design, analysis and interpretation of large-scale studies for institutional financial services clients. Meredith earned an MBA from Thunderbird School of Global Management and a bachelor’s degree from Colgate University. She is a former collegiate rower who now gets her exercise chasing after her 2-year-old daughter and Clumber Spaniel.

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