Financial advisors are optimistic about the future of their businesses despite the ongoing global pandemic and a changing industry landscape, according to a new report from Natixis Investment Managers.
Findings from the Natixis Investment Managers 2020 Global Financial Professional Survey revealed that Canadian financial professionals expect to see a modest increase of 2.1% in their assets under management over the next 12 months. More optimistically, those same professionals said they believe they will see annualized growth of 14.3% over the next three years.
Eighty-one per cent of respondents said they believe this growth will come from new clients, and 77% said that it will come from new assets from current clients. Only 57% of respondents said that market returns would drive growth.
While they are optimistic, advisors are not viewing the industry through rose-coloured glasses. Survey participants noted that they must improve their business practices if they expect to see assets grow.
A little over half of respondents (53%) said that in the future they will need to be better at establishing relationships with family members and next-generation heirs of their current clients. Many advisors (51%) said they need to improve when it comes to demonstrating the value of advice beyond building and allocating investment portfolios. Forty-four per cent, meanwhile, said helping their clients avoid making emotional investment decisions would be an area of expertise to focus on in future.
“Advisors are adapting their business to align with anticipated growth opportunities, and the path to profitable growth isn’t likely to follow the status quo,” said Dave Goodsell, executive director of Natixis’ Centre for Investor Insight, in a statement. “To win hearts and assets, advisors need a keen understanding of how clients’ needs and expectations are evolving.”
Indeed, survey respondents said that over the past year, clients have started asking for services beyond basic portfolio selection.
Sixty-nine per cent of advisors noted an increased demand for financial planning, while 43% said clients are looking for tax-efficient investment strategies. Other growing areas of interest for clients include estate planning and environmental, social and governance investment strategies.
The survey was conducted by CoreData Research between March and April 2020. In Canada, CoreData surveyed 150 financial professionals, including wealth managers, investment advisors, financial planners and wirehouse and independent broker dealers, with a total of $8.6 billion in assets and an average of 19 years of industry experience.