The terrain for financial advisors is shifting. The ubiquitous adoption of smartphones and the use of social media have changed the way advisors connect with clients.
Finding the best way to deliver services and information is critical to keeping clients content and attracting new ones. And neither advisors nor clients would ever dare forget the ultimate bottom line: portfolio performance.
To find out what advisors and clients are thinking, EY's 2014 Wealth Management Survey asked both groups a series of questions.
EY boiled down its findings to a few key points:
- Advisors and firms must do more to show the lasting value of a goals-based approach.
- Firms need to make investments to capitalize on wealth transfers and mitigate the risk of losing assets.
- Portfolio management customization is valued, but employing it can create conflicts with firms who want to maintain consistent management and products.
For the survey, which covered advisors and clients in three wealth groups (mass affluent, high-net-worth individuals and ultra-high net worth individuals), EY partnered with Oxford Economics, which contacted subjects in the U.S. Canada, Brazil and Mexico. For some questions regarding methods of communicating with clients, the answers are broken down by the method as well as the age of the respondents.
In the end, EY concluded that advisors need to "consistently understand and address client needs," while shifting to a goals-based planning approach. Another opportunity for advisors exists, EY said, as boomers retire and need help in planning for succession. And then there all those channels for reaching clients that must be leveraged. None of them should be ignored.
(For a report on how advisors should use various channels, check out Advisors Should Use Social Media Despite Hurdles: IRI.)
Take a look at EY's 12 Key Insights for Financial Advisors and Their Clients: 1. TRENDS
— Clients: What are the most important trends influencing where you invest your assets today?
- Holistic goals-based planning: 45%
- Geographic diversification: 42%
- Generational wealth transfer: 38%
- Consolidation of assets into fewer wealth management firms: 37%
- Access to product specialists: 32%
— Advisors: What are the most important trends driving your business growth today?
- Generational wealth transfer: 55%
- Holistic goals-based planning: 53%
- Geographic diversification: 41%
- Improved client experience and tools: 35%
- Shift toward non-traditional investments: 32%
- Consolidation of assets into fewer wealth management firms: 32%
2. BUSINESS FUTURE
— Advisors: Which of the following trends represent the greatest risks for your business in the future?
- Heightened regulation, disclosure and compliance: 67%
- Generational wealth transfer: 48%
- Lack of business succession planning: 41%
- Client desire for self-direction: 32%
3. SATISFACTION
— Clients: How satisfied are you, in general, with your current method of interaction with your financial advisor's firm?
- Very Satisfied: Mass Affluent, 55%; High Net Worth, 40%; Ultra-High Net Worth, 60%
- Satisfied: Mass Affluent, 25%; High Net Worth, 20%; Ultra-High Net Worth, 35%
- Neutral: Mass Affluent, 20%; High Net Worth, 30%; Ultra-High Net Worth, 5%
- Unsatisfied: Mass Affluent, 0%; High Net Worth, 10%; Ultra-High Net Worth, 0%
— Advisors: Do you expect to switch firms in the next three to five years?
- Yes: 11%
- No: 89%
4. SUPPORT
— Advisors: How satisfied are you with your firm's level of advisor support?
- Comprehensive product set: 84%
- Specialized knowledge: 83%
- Sales and marketing support: 76%
- Product sources: 75%
- Flexible reporting and communication skills: 67%
- Operations and admin support: 67%
- Tools: 55%
- Talent acquisition and Development: 48%
5. INVESTMENT APPROACH
— Clients: What level of discretion do you prefer your financial advisor to have as it relates to using a firm's asset allocation?
- Some level of advisor discretion: 42%
- High level of advisor discretion: 37%
- No advisor discretion: 21%
— Advisors: Which of the following best describes your firm's asset allocation model management policy?
- Recommended (strongly encouraged): 41%
- Optional (full advisor discretion): 24%
- No policy exists: 18%
- Prescriptive (mandatory): 17%
6. MARKETING
— Clients: How are you most likely to learn about a financial advisor with you may wish to work?
- Personal referral: Baby boomers and older, 86%; Next Gen: 89%
- Contacted by advisor: Baby boomers and older, 50%; Next Gen: 58%
- Traditional media exposure: Baby boomers and older, 23%; Next Gen: 16%
- Industry conferences: Baby boomers and older, 9%; Next Gen: 24%
- Marketing events: Baby boomers and older, 18%; Next Gen: 18%
- Nontraditional media exposure: Baby boomers and older, 5%; Next Gen: 21%
- Marketing campaigns: Baby boomers and older, 14%; Next Gen: 16%
— Advisors: What are the most effective ways of reaching and marketing to prospective clients?
- Advisor-driven campaign: Baby boomers and older, 59%; Next Gen: 59%
- Advisor-driven campaign events: Baby boomers and older, 44%; Next Gen: 55%
- Nontraditional media exposure: Baby boomers and older, 23%; Next Gen: 16%
- Firm-driven campaign: Baby boomers and older, 44%; Next Gen: 16%
- Traditional media exposure: Baby boomers and older, 35%; Next Gen: 35%
- Industry conferences: Baby boomers and older, 29%; Next Gen: 25%
7. CLIENT ACQUISITION
