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Despite all the research reports, surveys and conference panels urging financial advisors to offer comprehensive, customized services and adopt new technologies, few advisors are changing the ways they do business, according to a new joint study from SEI and the Financial Planning Association.
Most financial advisors aren't segmenting clients, planning for the next five to 10 years, differentiating their services from one another or focusing on millennials and Gen Xers even though their populations are growing while the number of boomers and members of the silent generation are declining.
The study, "Advisory Firms in 2030: The Innovation Imperative," surveyed 436 financial planners, most holding a certified financial planner designation and about half with 10 years experience in the business or less, plus 686 self-directed investors working with financial planners, though not the same planners that were surveyed. The investors surveyed had investable assets over $100,000 and half had assets between $250,000 and just under $1 million.
"If we look out 10 years, the industry will change dramatically … become more consumer- and technology-driven, but most advisors are not anticipating or planning for that change," John Anderson, managing director of Practice Management Solutions at SEI, tells ThinkAdvisor. "We are an industry focused on what it's doing today and not planning on what's going to happen tomorrow."
When asked about their future plans over the next five to 10 years, less than one-quarter of the advisors surveyed said they expected to adapt to changing client needs — "a very troubling figure," according to the study — although 42% expect they will customize client services based on specific needs of clients.
The study also found that 55% of advisors surveyed have no business plan in place, and two-thirds meet with clients in their offices while only 9% meet clients virtually.
"Consumer demands keep growing, and technology keeps evolving," according to the study. The profession needs "to get ahead of what's next and create meaningful ways to engage with clients on their terms. Those who can will likely thrive. The rest may get left behind."
