It's no secret that 2009 was a rebound year for both the market and the average advisor. After suffering from high client attrition, AUM decline, and revenue decreases in 2008, advisors took the opportunity to fortify their practices in 2009. As we begin the new year and new decade, Rydex|SGI AdvisorBenchmarking is taking stock of the main challenges advisors face in order to help you be better equipped for a stronger 2010. To that end, in December 2009 we conducted a survey of 356 advisors to determine advisor expectations and top goals for 2010. Concentrating on these resolutions for 2010 will help you continue to strengthen your practice and get back on the road to growth.
1. Find Sources of Growth
In light of this past year's economic events, the main goal for many advisors is to reach their pre-crisis asset levels and resume robust growth. The majority of advisors (70%) indicate that asset growth and profitability are their top priorities in 2010. And advisors are on the right track–72% said their assets increased in 2009 and 70% said their number of clients increased. Of those who reported growth, most attribute that increase to assets from new clients (88%), new assets from existing clients (72%,) and market performance (88%). Going forward, investment advisors will need to focus on profitability and acquiring and retaining clients.
2. Reexamine Expenditures
More than half of advisors (55%) anticipate that we'll be in a medium-return environment for the next year. They expect to achieve a 6% to 10% average rate of return on client portfolios during 2010. In this environment, the majority of advisors (72%) are forecasting growth for their practices, while 27% will be in "maintenance mode," and just 1% will be downsizing their practices.
In order to grow their practices, one of the biggest challenges for advisors is taking control of expenses to move toward pre-2008 levels. Advisors report they are cutting non-revenue-generating expenses, including bonuses (41%), salaries (21%), and travel expenses (28%). However, to help drive revenue and offer a better client experience, 40% of advisors expect to invest additional dollars in technology–specifically, buying CRM and portfolio management and reporting software. To increase revenue, pick up new clients, and build their asset base, 42% of advisors expect to increase marketing spending. Advisors are most interested in client communication systems; performance, reporting, and marketing tools; client-needs-analysis software; and client education and presentation material software. Investing in the right software system and marketing efforts can significantly improve and increase advisors' business.
3. Have a Plan
