What Is The Future Of The Investment Advisor Industry?
- Business Finance Financial Advice
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- 8 minutes read
The investment advisory industry like many others has gone through a disastrous ride the last year. From social distancing that has forced all the advisors to change to virtual conversing to a highly fluctuating stock market that was unable to decide if it was bearish or bullish. It was a year of keeping yourself inside the car every time. So let us have a financial advisor industry analysis.
According to John Diehl, who is the senior vice president of Applied Insights at the Hartford Funds said,
"2020 has certainly presented us with what seems like more change that we were prepared to handle, but how we respond to it will determine who will lead in the future of this profession."
Alteration is not always welcomed, but there are many advisors in the investment advisor industry that have taken the charge of such alteration that was brought by the 2020 pandemic and has strengthened their practices.
According to Bernie Clark, who is the executive vice president and also the head of Schwab Advisor Services that help independent advisors to initiate and grow their firms said,
"Over the course of a few weeks, we saw clients transition from working from home to growing from home. And that is really a change in mindset, from just working remotely to growing remotely."
This shift brings new chances for the advisors in the new normal scenario.
Limitations Of Virtual Communications In Investment Advisor Industry
Looking at the financial advisory market size, the primary and the biggest shift for the investment advisor industry during the pandemic of 2020 is the push to virtual advice. There have been both positive and negative impacts on the industry according to Wealth Management Industry statistics.
According to Diehl,
"It wasn't only a change in communication between financial professionals and their clients, but also between team members within the practices themselves. Initially, I think there were positives."
He further adds,
"We were exploring the use of tools that had been at our disposal for years but that few of us had utilized, and we learned new ways to interact with people where previous means of communicating were not available."
But with time the drawbacks of the virtual advisory started to show off. The established clients could adapt to the changes but it was difficult to establish new relationships with new clients through virtual meets.
With the already established clients, it was still easier as the advisor-client relationship shared and cultivated common relationships before. But to introduce oneself and create a good impression only through virtual meets has become difficult. Having said that, advisors who can overcome this situational crisis and walk forward are in the position of advantage in this scenario.
Shifting Focus Of The Clients
Not only the modes of communications have changed in 2020, but the client base is also changing altogether. The client base is changing on various diaphragms. Whether it’s an increase in the diversity of the client base, or the wealth ownership between generations, or the evolution of planning priorities and needs. With alterations that are varying from long term care and charitable giving to socially responsible investing and private equity. It is high time for the investors to think diversely about their clients. This will set their firm different from others.
According to the CEO and Co-founder at Focus Financial Partners, Rajini Kodialam,
"Our partners' clients focused more now than ever on integrated tax and estate planning, philanthropy, and intergenerational wealth planning."
According to her, this pandemic has expanded the requirement for access to additional options in investment such as an alternative in a low yield scenario. Likewise, it has increased the requirement for access to a widened suite of services such as lending, deposits, insurance and trust service, family office service. According to Kodialam,
"These services are important to client retention, and we anticipate that they will accelerate the flight to quality of advice post-crisis."
The clients are now not just demanding during the pandemic, they have become quite active in finance as well. The net cash flow is increasing in the retailers’ investment services and products and a good amount of life insurance is being sold. According to Gokhale who is a life insurance advisor,
"One silver lining from the canceled social events and routine commutes is that clients have had fewer distractions, giving them more time to focus on their financial plans and take steps to act on their financial goals."
How To Become A Financial Advisor?
After reading the prospect of investment advisors even though their experience has been a roller coaster since 2020, you may wonder how you become one as the career prospect in this field is immense and you may also wonder about the financial advisor salary. So here is a small piece of information about financial advisors.
To become a financial advisor one should have a related education qualification. People who have relevant degrees in finance can move towards this career option. Other than that people can take up this profession with specialization in various relevant fields such as accounting and financial management. And the average package of a financial advisor in India starts from Rs 7,00,000 per annum.
Conclusion
The Investment Advisor Industry is growing to a great extent now. According to a report, by 2028 the financial planning industry is expected to see a leap by more than 7% and this percentage is higher than the average of all other professions that is 5%.
