The fifth annual Advisor Authority study, commissioned by Nationwide Advisory Solutions and conducted by The Harris Poll, found that the most successful advisers are able to spot new trends and set new ones. Nationwide defines successful advisers as those who earn $500,000 or more a year or have total assets under management (AUM) of $250 million or more.
As to how successful advisers are able to spot emerging trends, they “act like business owners and have what we like to call a ‘CEO mindset,’” Craig Hawley, head of Nationwide Advisory Solutions, tells PLANADVISER. “Every aspect of their practice—from consolidating technology and adapting their marketing, to building their client base and cultivating their in-house team—is built around a long-term vision for the future of their firm. With this outlook, they’re always looking one step ahead, balancing short-term objectives with long-term investments, to create operational efficiencies, drive growth, achieve scale and build an ensuring franchise.”
And Hawley estimates that there are few successful advisers as defined by Nationwide: “While compensation and AUM [assets under management] figures at the industry fee-based adviser level is a bit difficult to come by, based on the data available for the independent RIA [registered investment adviser] space, we would estimate that less than 2% of RIAs individually manage more than $250 million in AUM.”
The study found successful advisers are also more likely to put more importance on adding new hires than those who are not as successful (22% versus 11%), and to consolidate technology (21% versus 15%). Successful advisers rely less on adding new clients than other advisers (37% versus 46%). Rather, they are slightly more focused on adding new technology (27% versus 25%).
They are more likely to have adopted Artificial Intelligence (AI) (41% versus 27%) and robo-advisers (26% versus 17%). They are also more likely to offer interactive websites and/or client portals (47% versus 38%), tax optimization tools (38% versus 35%) and account aggregation systems (34% versus 31%).
“They use technology to transform every aspect of the customer experience, from the front end to the back office, opening the door to a new category of client, offering a new universe of products and solutions—and ultimately gaining an edge over the competition,” Nationwide says. “By aligning with clients’ best interest, successful advisers earn their trust, deepen the adviser/investor relationship, create greater loyalty—and, ultimately, bring more assets under management.”
Hawley explains how successful advisers are using AI: “We know that the most successful advisers are squarely focused on using AI to better understand and better serve their clients—including analyzing clients’ feedback and predicting clients’ future needs and behavior. With the right CRM [customer relationship management] and a strategy to capture more high-quality data, advisers can develop predictive profiles using AI tools that are widely available, such as Saleforce’s Einstein and EIM’s Watson. They also use AI to build more durable portfolios, select products and protect clients’ assets against market risk.”
As for what types of interactive websites and mobile tools successful advisers are using, Hawley says that mobile apps are essential and that the tools they are using include those focused on budgeting, and planning and comparing products; calculators to help guide goals for saving and generating income; robo solutions to help with portfolio allocations; and secure, encrypted file-sharing services.
Successful advisers are more likely than other advisers to agree that there should be one federal financial standard across the financial services industry (82% versus 74%).
Successful advisers are more likely than others to say that technology frees up their time to focus on one-on-one relationships with their clients (35% versus 28%). They are also more likely to use technology to protect clients against market risk (33% versus 26%) and to provide them with more holistic financial planning (29% versus 25%).
Mike Lynch, vice president, strategic markets at Hartford Funds, adds that successful advisers need to be “good educators who can educate participants not just on the financial side of life in retirement but the non-financial side—where they should live, how they should spend their time.”
Nationwide’s full report can be downloaded from here.