According to the study, 95% of advisers grew their books of business in the last 12 months, and with average assets under management (AUM) at $62 million and average compensation at $240,000, advisers seem to be enjoying strong near-term success. However, the study argues many advisers appear to be overlooking several important steps to help ensure growth will continue in the long term, as follows:
- Two-thirds of advisers surveyed for the report do not have a multi-year growth plan in place, and nearly half have not set formal career goals for themselves. Fidelity warns that achieving meaningful, lasting gains in AUM and compensation requires a formal vision of where an adviser wants to be long-term, and what steps can be taken to lock in any gains.
- Forty-three percent of advisers do not feel it is important to evolve their practice to meet the needs of younger investors, implying future challenges as wealth transfers from retiring Baby Boomers to younger generations. Changing market dynamics and emerging technologies call for advisers to consider taking a closer look at how they will build and manage client portfolios in the future, Fidelity says.
- Two-thirds of advisers believe they stand out from the competition by giving clients personal attention, but Fidelity warns advisers may want to consider new strategies that set them apart and help position them for long-term success, such as building a well-rounded advisory team or adopting newer technologies.
“Business has been good for advisers, but it’s important they don’t put off what’s needed to ensure the future looks just as attractive,” explains Brian Nelson, vice president of practice management for National Financial, a division of Fidelity Investments. “There are steps advisers can take today to help position themselves for tomorrow and ultimately contribute to a high-performing firm, one that is profitable, productive and growing.”
The study finds high-performing advisers—which Fidelity identifies as advisers who appear to be positioned for both short- and long-term growth—tend to use three strategies to shape near-term momentum into lasting success.
First, Fidelity finds the most successful advisers are also the most serious about setting down a growth plan on paper. According to the study, 63% of high-performing advisers have formal career goals, and they are much more likely to have planned out different areas of their business, particularly such areas as business continuity and succession planning. Given the link between planning and growth, Fidelity says advisers should consider placing an emphasis on developing formal plans that articulate a vision for the long-term future and clearly outline initiatives that can bring about lasting success.
Next, Fidelity finds the most successful advisers are taking steps to realign their client base to address changing demographics. It’s an important step for protecting growth prospects in the long-term future, Fidelity says, as about 70% of the typical financial adviser’s clients are Baby Boomers or older. Forty-two percent of high-performing advisers actively target Generation X and Y investors, compared with 17% of other advisers. High-performing advisers are also nearly twice as likely to ask less profitable clients to leave the firm, and more than twice as likely to target high-net-worth investors.
Finally, high-performing advisers appear to be more proactive about finding ways to differentiate their services from the competition. Only 21% of advisers see team building as a differentiator, and while 64% feel technology can increase value to clients, only 35% are willing to spend money on it. Fidelity argues that these factors are more significant to client satisfaction than other factors advisers typically point to, such as a lengthy track record or the ability to provide clients with one-on-one attention.
The study finds high-performing advisers are embracing strategies such as teaming with others, harnessing technology and customizing their offerings to create a strong value proposition designed to help them stay relevant to tomorrow’s investors. Sixty-seven percent of high-performing advisers work to tailor their approach to each client’s long-term goals (vs. 58% of other advisers). They were also heavier users of technology, with 52% of high-performing advisers actively investing in new technology.
A fuller discussion of the seventh “Adviser Insights” study report is available here.