Trending
Written by: Jennifer Valdez | intelliflo
Last year was shaped by rising client expectations, advancing technology and an uncertain market, prompting advisors to think critically about their strategies surrounding the investor experience and their technology stack. As we look to the year ahead, there are certain trends poised to create both challenges and opportunities for advisors, including the acceleration of money in motion, the need for easier access to data and the persisting expectation for advisors to accomplish more with existing resources.
The acceleration of money in motion
The transition of wealth is happening in several ways. For example, baby boomers are increasingly passing along their wealth to Gen X and Millennial family members, causing a significant influx to the mass affluent. These younger generations have different preferences and expectations than their predecessors, often favoring digitally optimized self-service options and more flexibility in how they receive financial advice. Advisors must determine how to respond and effectively incorporate modern technology to retain these critical segments.
Another significant example of money in motion, women are poised to control wealth in the coming years, which will cause a substantial shake up in the financial advisory space. According to McKinsey & Company, women are set to control $34 trillion in the United States by 2030, which represents 38% of all investable assets. However, not all advisors are effectively reaching their female clients; in fact, research shows that most women will leave their financial advisor within 12 months of being divorced or widowed. This likely means that the firms that lack the tools and strategies to properly engage with women will be left behind.
The need for easier access to data
The RIA sector is one of the fastest-growing segments in the U.S. wealth management industry, making the demand for more actionable data more critical than ever before. To compete and stay ahead of the curve, advisors need easy access to robust data to make sound business decisions and deliver personalized advice. While many have looked to APIs in recent years, this form of connection typical requires extensive integration and developer support, something most RIAs typically lack.
Instead, this year more RIAs will look for technology solutions and providers that enable direct, comprehensive access to both historical and real-time data. By connecting this data with business intelligence tools, advisors will be able to quickly uncover valuable insights that can improve client service and drive more informed business decisions. Such capabilities will also create value from a reporting perspective.
The expectation for advisors to serve more people with existing resources
In the face of macroeconomic challenges, advisors are stretched increasingly thin, facing pressure to grow while simultaneously cutting costs and operating on thinner margins. At the same time, client expectations are sky high, with a widespread expectation for personalized advice and tailored interactions.
To keep up with these pressures and compete, more advisors are embracing the use of modern, cloud-based technology to streamline routine, tedious tasks. By automating specific tasks, advisors can speed processes and save time for higher value client interactions. In the year ahead, expect more to strategically leverage technology, such as automated rebalancing and digital engagement tools. Advisors who do so intentionally will be able to operate more efficiently, meet shifting preferences and drive growth.
This year is set to be another with massive change across the financial advisory industry. The advisors that proactively adapt to these trends, embrace innovation, incorporate new strategies and thoughtfully adopt modern technology, will be better positioned to strengthen client loyalty, enhance efficiencies and grow.
Related: How Trump's First Actions as President Could Boost These 3 Stocks