Thanks to significant practice growth during the last few years, advisers feel empowered and optimistic about their future prospects, according to a new report, “Harnessing Growth: The LIMRA-EY Experienced Financial Advisor Study,” based on an online survey of nearly 1,500 advisers.
Eighty percent say that they have experienced significant gains in gross income in the past few years. While many said the growth was due to market gains, 50% said it was due to growth in the number of clients they serve. As a whole, advisers say their client base grew 22% in the past two years.
This growth has also increased advisers’ expectations for service and support from insurers and other ecosystem partners.
The changing business mix—i.e. investment products, life insurance, annuities, advisory-related fees and other insurance products—means more types of practices now offer a broader range of products and services and compete more intensely for similar customers.
Nearly 80% of advisers also see the use of digital tools as essential for marketing, prospecting and client communications. Today, 43% of advisers use social media to prospect for new clients. Fifty percent plan to increase their use of texting, virtual meetings and social media for prospecting and client engagement. Furthermore, they expect their providers to interact with them via digital channels.
More advisory practices have turned to teaming and other practice support models to keep up with complex customer needs. To this end, they have entered into formal or informal arrangements with practice support professionals, such as product specialists, legal and tax professionals and wholesalers. More than 40% report that they are part of a formal teaming arrangement with fellow sales professionals within or outside of their agency or firm.
Seventy percent of advisers also expect that fiduciary requirements will drive up compliance costs and impact the products they sell. Eighty-six percent expect compliance requirements will increase.
They also expect investment firms and insurers to offer innovative products and best-in-class service and support, to help them grow their practices. This offers an opportunity for carriers and other financial service firms to differentiate in an increasingly commoditized environment. Organizations must commit to a strategy that extends their value proposition beyond product offerings and solidifies relationships with the highest value advisers.