A new survey examines some of the opportunities and challenges for financial advisors in 2024, Financial Advisor reports.
The data is contained in the Natixis Global Survey of Financial Professionals, which said that advisors are attempting to navigate short-term risk to ensure long-term success as they seek to retain clients and assets.
The authors note that the most critical challenge facing advisors in growing their business is keeping current assets on the books, but that is put at risk when a client dies and leaves their holdings to a spouse or children. Thus there is much concern over the so-called Great Wealth Transfer that will see $84 trillion passed down over the next 20 years.
46% of advisors surveyed worldwide say this transfer represents an existential threat to their business. 43% are increasingly worried they will not retain assets from clients’ spouses or next-generation heirs.
Advisors did say they have been able to retain client relationships 72% of the time when the spouse inherits. But when a client’s children inherit, advisors say they’re successful only 58% of the time.
The survey of 2,700 advisors in 20 countries was conducted between June and August. It also examined the business strategies advisors are using to retain their clients and assets.
76% of those surveyed said the most important factor for retaining assets is relationship building. 82% said they are regularly discussing family wealth planning with older clients. 81% extend the discussion to family members by including heirs in the financial planning discussion. 81% also said they are comfortable asking their clients for an introduction to the next generation.
“In addition, advisors say they help enhance relationships with families by providing personalized services, such as networking events (47%),” the authors said. “One-third even offer financial boot camps that give next-generation heirs a firm footing in investing fundamentals. All in, these enhanced relationships allow heirs to gain experience working with their families’ financial advisors.”
Overall, 22% of advisors said they’ve lost significant assets through wealth being transferred. “I think the numbers may be higher and advisors are losing more clients than they report,” Dave Goodsell, executive director of the Natixis Center for Investor Insight, said.
To improve their prospecting strategies, the survey found about half of advisors plan to create a team that has a member dedicated to prospecting. Almost half (43%) of advisors are leveraging social media strategies for prospecting and 21% find promise in leveraging future AI-powered prospecting tools.
“Finding more time to deepen relationships with clients and financial planning service offerings will be crucial to the success of advisors and their businesses in the long run,” Goodsell said.
The survey concludes that advisors realize they face a two-fold challenge. “Not only will they need to manage investments through a changing macro and market environment, but the bigger challenge will be managing clients though the change. To be successful, they will need to reeducate clients on key investment concepts, get them acclimatized to new risks, and help them manage their expectations.”
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