The Great 2020 Reset

An Opportunity to Rethink Your Advisory Business

CURRENT STATE

The events of 2020 made this a year of reset for investors and advisors alike. With the majority of people in the US being DIY investors, the need to work with a financial advisor is even more evident. For advisors, 2020 is a reset on how to service clients. Today’s digital first world requires more client facing engagement. Fulfilling that need is a combination of advisors having the right software to offer a digital experience and scale aspects of their business, such as investment management, with third-party model portfolios.

Advisors that pivot for the new reality will stand out above the others. Oranj and Wisdom Tree conducted separate studies on technology and investment preferences surveying both advisors and investors. Both point to a large opportunity for advisors to reshape their business.

THE DIGITAL DIVIDE

Clients Want a Digital Experience. Oranj sponsored studies aimed to help advisors maximize trends in advisor technology. When asked what would improve their current advisory experience, investors’ top request was for an aggregated view of key financial accounts (55% selected this as “extremely useful” or “very useful”) followed by 50% requesting an account reporting dashboard.

Halfway There. In the corresponding study of advisory firms investment in technology, Oranj discovered that 56% offered a client-facing portal. So, despite digital tools being ubiquitous in everyday life, nearly half of advisors failed to offer a digital client experience. 

MYTHS AND TRUTHS OF OUTSOURCING INVESTMENT MANAGEMENT

Advisor Perception. Wisdom Tree’s research explored advisors’ perception of third-party model portfolios and the relatively low adoption. The research uncovered that many advisors still associate investment management with their core value proposition and believe their clients do as well. In addition, over 50% of financial advisors believe model portfolios do not allow tailoring to client situations or personalized service. 

The Reality. These assumptions are unfounded on two levels-consumer perceptions AND model applications and approaches. 

First, 86% of the consumers surveyed were not only open to, but actually welcome, model usage in their portfolios. In fact, 63% of consumers believe that advisors using third-party models provide a more sophisticated asset allocation approach backed by the extensive research and technology of an asset manager’s team.

Second, through the technical approach of accessing valuable research and data from asset managers, combined with the advisors’ intimate knowledge of their specific needs, consumers view each applied model as an advisor’s tailored response to their unique situation and goals. In fact, 58% of consumers surveyed were more likely to switch if they were aware that another advisor uses third-party models in their portfolios.

TIME FOR A SHIFT

While the path forward is mostly undefined, research shows investors want their advisor to provide a digital experience and a majority prefer advisors utilizing model portfolios. The good news? Advisors can deliver both on a single platform that offers a modern client portal and a model marketplace of professionally managed strategist models that can be seamlessly implemented to power their business.

Learn more at www.WealthManagement.com