Products June 1, 2022

Invesco and Cerulli Launch Practice Innovation Index

According to the firms, the index builds on the concept that high-performing financial professionals measure their success by the impact they make on clients’ lives.

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Invesco and Cerulli Associates have announced the launch of their new Practice Innovation Index, described as a digital analytics tool that benchmarks key traits and characteristics of financial practices.

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According to the firms, these traits and characteristics span four benchmarking areas: business development, wealth management, client service and practice management. The benchmarking methodology leverages more than 10 years of Cerulli survey data to analyze where a practice ranks among peers and provide a customized roadmap designed to help them expand their businesses.

The launch of the index comes at a time when the financial adviser industry is undergoing substantial change, in which record-setting merger and acquisition activity and a blurring of the line between financial services industry verticals play a leading part. Advisers say it is a great time to be in the business, but they also cite as challenges evolving regulations and increased competition.

John McDonough, head of U.S. wealth management intermediary distribution at Invesco, says the new service is meant to support advisers as they tackle greater business complexity and evolving client demands. He points to Cerulli survey data that shows advisers most commonly identify new client acquisition (52%), compliance (40%) and managing technology (30%) as their practices’ primary challenges.

The index is based on an assessment of the participating firm. Powered by Cerulli’s data, the Practice Innovation Index’s proprietary methodology scores and benchmarks responses. Each question is scored against the benchmark, and results are shown for each of the four categories and in aggregate, highlighting how the financial practice ranks among peers. Financial professionals are then shown a roadmap designed to leverage their strengths and address opportunities for improvement. For more complex financial practices, advisers can access Invesco’s dedicated coaching to help create actionable plans.

“Advisers today face the challenges of addressing demands from investors, financial markets and regulators, all while striving to scale their businesses,” says Asher Cheses, associate director of U.S. wealth management at Cerulli.

Cheses says the index will provide a quantifiable tool designed to benchmark the attributes of the industry’s leading financial practices, ultimately enabling advisers to help their clients achieve their financial goals.

Data & Research May 31, 2022

How Plan Sponsors Feel About Financial Advisers

For plan sponsors, having dedicated financial advisers to help with investment oversight brings added peace of mind, a survey says.

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In its new survey, “The Value of a Financial Advisor,” Morgan Stanley examines how plan sponsors feel about financial advisers and how advisers affect employee outcomes.

The survey considers the point at which plan sponsors feel it best to onboard a financial adviser, with 35% of respondents agreeing that the best stage is when growth is between 20 and 100 employees. If there was hesitation in onboarding a financial adviser to their plan, 56% of sponsors said it would be because of added fees, while 28% said an adviser would add no value and 14% said employees would not use one.

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Plan sponsors value peace of mind, with 28% saying that oversight on investment management was the primary reason for offering a financial adviser to their 401(k) plan, the study says. With compliance (75%) and fiduciary guidelines (67%) seen as critical conditions, the study notes that it makes sense that sponsors would welcome the oversight.

The survey found that businesses of different sizes prioritized different needs. Small businesses with less than 20 employees named resources for employees (26%) as the primary reason for having a financial adviser. Enterprise businesses with over 3,000 employees reported needing investment oversight (37%) and growing midsize businesses with 20 to 100 employees were looking for guidance on plan design (20%).

Plan sponsors, regardless of their business size, reported that the No. 1 advantage a financial adviser brings to their plan is oversight of investment management (27%), the survey says. They also cited as advantages guidance for regulatory concerns (21%) and availability to answer employee questions (17%).

Most plan sponsors agreed that having a dedicated financial adviser to support their company’s workplace retirement plan delivers better plan outcomes (87%), encourages participation (86%), provides support for employee questions (92%) and is worth the cost (95%), the survey found.

Of those plans with a dedicated financial advisor, 85% or more, depending on company size, offered investment choices (e.g., target date funds, ETFs, company stock options, etc.) to their participants, according to the survey. In general, plans with financial advisers offered robust features such as automatic match, match options and automatic enrollment.

For the plans that currently offer a dedicated financial adviser, 85% reported that most or all of their eligible employees are on track for retirement, while plans that do not currently have one reported a lack of insight into retirement readiness, the survey found. When it comes to employee participation, 44% of plan sponsors who offer a dedicated financial adviser reported that 75% to 100% of eligible employees participate in their company 401(k) plan.

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