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No one said attracting clients is easy and there’s a plethora of effective strategies for doing so, but for registered investment advisors, the good news (or it should be) is that business should be perking up.
As in chances are an advisor’s client rolls are larger today than they were three and five years ago. Of course, that’s not uniform across the industry, but various studies and surveys suggest more advisors are seeking the help of financial professionals. Increasing global wealth and the early stages of the much ballyhooed wealth transfer are among the reasons more investors are turning to advisors.
Fortunately, many advisors are likely prepared for these wealth issues, some even more so than they currently realize. After all, the great wealth transfer has been ingrained into advisors for years now. Likewise, it’s reasonable to assume many advisors have spent significant portions of their careers working to land business from highly affluent clients.
For advisors that haven’t experienced a significant uptick in client population over the past several years, now is a good time to examine what’s going right and what can be improved upon in terms of practice execution, marketing and client connectivity. And don’t get down in the dumps because studies confirm more investors will matriculate to advisors and wealth managers in the years ahead.
Bright Outlook for Advisory Industry Growth
A recent survey by Ortec Finance, a global provider of risk and return management solutions, indicates that 92% of advisors queried saw client rolls increase over the past five years and 17% said the increase was “significant.” Another 63% said they believe that trend will continue over the next three years.
“37% anticipate the number of clients they look after will grow by up to 20% over the next three years. 19% say the number of clients will grow by between 30% and 50%, and 1% say it will increase by more than 50%,” according to Ortec.
Another important, revealing point in the survey is that one of the primary reasons retail investors are becoming new clients is the rapid evolution of technology. That is to say advisors need fear tech, but rather they should embrace it for the good of their top and bottom lines.
“A major cause of this anticipated client growth is advancements in technology. More than three quarters (78%) of those surveyed said significant investment in technology means they can service more clients more effectively. Almost half (48%) said investing in technology has improved their value proposition, which is leading to growth for the company and 41% said that technology advancements mean they are empowered to provide a more client-centric approach to more clients, more effectively than ever before,” adds Ortec.
Understanding the Recipe for Client Growth
For advisors that feel as though they’re missing out on client growth, the fixes aren’t complex. Consider a wider embrace of social media and technology, improving soft skills or focusing on specific demographics and professions.
“Our research shows that wealth managers and financial advisors are expecting further increases in the number of clients, despite the majority already experiencing numbers increase over the past five years,” concludes Ortec Managing Director Ronald Janssen. “While this is extremely encouraging, it also brings new challenges in terms of having the right skills, experience and technology in place to provide more clients with the best possible service. Next to that also regulations around suitability are evolving.”