A recent study released by Broadridge Financial Solutions and the Financial Services Institute (FSI) seeks to shed light on growth opportunities within the wealth management industry. The study examines opportunities for advisers to leverage digital technology, explore new investment vehicles, expand their businesses and make stronger connections with previously underserved communities and the next generation of investors.
The firms say the survey of more than 400 U.S. financial advisers highlights the potential the adviser community has to drive environmental, social and governance (ESG) investing—as well as the important area of diversity, equity and inclusion (DE&I).
According to the study, 92% of advisers report that they’re satisfied with their technology capabilities, but they still see opportunities for improved technology that could help them better meet their practice goals. Additionally, 83% of advisers argue that better technology tools would greatly improve new client acquisition, especially as 32% of advisers express interest in prospecting outside of their current geographic locations and say they will rely on improved technology tools to reach prospects virtually.
“This joint study with FSI highlights the growth opportunities for financial advisers and the heightened role technology tools play in enabling advisers to provide a better service experience, foster deeper relationships and reach new constituencies,” says Chris Perry, president of Broadridge Financial Solutions and a board member of FSI. “Advisers are taking advantage of this wave of digital transformation to provide investment ideas, offer financial literacy tools, discuss ESG trends and connect with clients and their families in new ways.”
Results from the study suggest that videoconferencing will continue to play a major role in the industry, as 51% of advisers report they are still conducting formal client meetings virtually—either via phone or videoconferencing. Advisers expect to increase their videoconferencing usage in the next 12 months (39% versus 21% currently using the tool). At the same time, 88% of advisers expect to either increase or maintain their current rate of in-person, formal client meetings in 2022.
Crypto and ESG
As the market remains in a low interest-rate environment and investors are seeking creative ways to find returns, that study shows that 64% of advisers report they have seen an increased interest in cryptocurrency investments from clients. Further, 33% of advisers report that they have seen an increased interest in ESG investments from clients as the asset class gains popularity.
“With the rise of DIY investing and clients’ growing interest in branching out to new asset classes, financial literacy is of the utmost importance and advisers have a clear role to play,” says Dale Brown, FSI president and CEO. “There is a significant opportunity for advisers to educate current and prospective clients and empower them to make better financial decisions, and technology tools can enable them to be informed and connected.”
Social Media and Teaming Up
The study suggests that LinkedIn (77%) and Facebook (67%) are the most widely used social media platforms by advisers for both business and personal use, providing channels where advisers can reach their clients virtually.
More than half (58%) of advisers describe their practice as a “solo” practice, and. of the advisers who describe their practice as a “team” practice (42%), the study shows that the average team size is four, which the firms say suggests that advisers are increasingly reliant on technology tools to service clients and fill the personnel gap.
The study also shows that a solid majority of advisers (60%) are equally focused on financial planning and investment management, yet advisers under the age of 45 cite client-facing tools as the No. 1 area for technology improvement as they increasingly focus on holistic financial planning.
The Next Generation
Many advisers (89%) have engaged or plan to engage with additional generations of existing clients, such as children or grandchildren, the study finds. Of the advisers currently or planning to engage with those additional generations, 79% directly raise the topic with their clients and 55% offer to build the financial literacy of clients’ children or grandchildren.
While most advisers say they recognize the importance of building relationships with the next generation of investors through existing clients, results from the study suggest many also prioritize engaging their clients’ spouses in financial discussions, as nine in 10 advisers consider it important to maintain a strong relationship with both spouses. Further, advisers say that, on average, 68% of formal client meetings include both spouses.