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Written by: Jennifer Valdez, President of Americas | intelliflo
Financial advisors faced many challenges last year as economic pressures set the expectation for advice firms to accomplish more with less resources. Exacerbating the issue, persisting inflation and a high cost of living caused widespread anxiety among clients, spreading advisors even thinner. Plus, the technology landscape remains fragmented, with lingering frustrations around the lack of seamless integrations.
Despite these difficulties, there are also many opportunities on the horizon for advisors, from taking advantage of new technology to serving a new generation of modern investors. Below are four trends for advisors to watch as we move forward in the new year.
Financial advice will become more approachable.
As digital engagement options multiply and younger investors become more involved, there is a concentrated effort to make financial advice more approachable and relatable. Advisors are adapting, helping clients with areas beyond traditional investing, such as comprehensive guidance around insurance options and caring for aging parents. And, they are becoming more open to digital interaction tools, making communication more flexible.
Those who invest in modern, digital technology and are open to evolving their strategies will be well positioned to grow client relationships and attract younger investors. This will be especially critical as the Great Wealth Transfer looms.
RIAs will control their data.
A deeper understanding of their data empowers advisors to better serve clients, enhance reporting and make more informed business and technology decisions. While some providers have long made it difficult for RIAs to freely access and leverage their data, firms’ patience for such restraints are coming to an end. This year, more advisors will seek open solutions that deliver greater access and control over their data through APIs.
There will be a focus on stronger integration of tech and culture as M&A activity continues.
Merger and acquisition (M&A) activity remains healthy, with no signs of slowing down. However, more priority will be given to a tighter integration of not just the technology and processes, but also of the advisory firms’ cultures as they merge. For M&A to be successful, the once separate firms must embrace consistent strategies around business practices and the investor experience. This requires alignment and cohesion across the organization, from the top down.
More RIAs will outsource noncore business functions – which is more than cutting costs.
Outsourcing not only can help firms achieve greater operational efficiencies and reduce costs, but it also allows for more time and focus to be allocated toward creating a differentiated investor experience. For outsourcing to be an effective strategy, however, RIAs must be able to identify and prioritize their core competency or North Star. Then, other noncritical functions can be delegated to a trusted outsourcing partner while internal resources go toward what sets the firm apart. Those that simply view outsourcing as a cost savings tactic risk missing deeper benefits.
These trends all prompt advisors to reevaluate their technology and client service strategies. Advisors have a strong opportunity to increase efficiencies and strengthen client engagement. Embracing modern, digitally optimized tools, more strategically using data and viewing outsourcing differently can enable advisors to help more investors without adding significant resources. These strategic adjustments will be necessary to increase efficiencies, grow the business and ultimately widen access to financial advice.
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