New Entrants, Disruptors Could Shake Up the Financial Planning Industry

In its 2020 Global Survey of Financial Professionals, Natixis says that in order to continue to grow, advisers must think outside of the box and consider competition from new sources.

Right now, 62% of advisers say their biggest competition is from traditional financial professionals. Only 16% see do-it-yourself (DIY) tools for investors as a threat, and only 10% point to automated advice platforms. A mere 9% cite industry disruptors, such as Amazon, Apple or Google, as a threat to business.

However, Natixis says, “financial professionals see the writing on the wall and see tech soon catching up to their industry. When asked to project their competition in five years, only one in five think they will face off with other professionals. Instead, disruptors are their concern (31%), with enhanced DIY investor tools (25%) and automated advice running close behind.”

Advisers say they are not going to take these threats sitting down. Rather, they intend to get ahead of technology to strengthen their practices and client relationships.

“This includes leveraging technology like customer relationship management [CRM] systems (48%), streamlining their client base (44%), client segmentation (43%) and leveraging tools, like portfolio analytics, offered by asset managers (28%),” Natixis says. “Ultimately, enhancing efficiency will serve professionals well as they look to face up to the many challenges facing their business.”

Asked what clients have asked for more of in the past 12 months, 59% of financial professionals put retirement income planning at the top of the list, followed by financial planning (50%), estate planning (34%) and educating their family about money and investing (26%).

On the investment side, they point to tax-efficient investment strategies (40%) and environmental, social and governance (ESG) investing (29%) as sources of demand.

Asked what they find to be the most effective methods of prospecting, 85% of advisers say referrals from current clients, 46% say referrals from other professionals in centers of influence, 39% say establishing relationships across family generations and 24% say events and experiences.