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Thought Leadership in Action

For Financial Advisers: Business Trends to Watch in 2021


From virtual meetings and sustainable investing to succession plans, here are 2021 strategies for financial advisory firms.

As we look ahead into 2021, it will be interesting to see what’s next for the financial advisory business. We saw changes in the financial advisory landscape in 2020 due to the COVID-19 pandemic. In some cases the pandemic accelerated business trends that were already underway. Here are some advisory business trends to watch in 2021.

Virtual Meetings

The trend toward virtual meetings was in place prior to the onset of the COVID-19 pandemic. Like most other businesses, the use of virtual meetings between financial advisers and their clients has accelerated exponentially in the past year. This trend should continue into 2021 and beyond, even after the pandemic has passed.

This allows advisers to work with clients regardless of where they are located. This benefits both advisers and clients, allowing clients to look for advisers who best fit their needs regardless of location. Even clients who are located in the same city as their adviser often prefer not having to take the time to drive to their adviser’s office for meetings. We’ve also seen that the next generation of clients seems to have less interest in meeting in-person with their financial adviser than previous generations.

Improving Client Digital Experiences

Another trend that was in process prior to the COVID-19 pandemic is providing clients with a more robust digital experience. This includes not only your firm’s website, but in the overall way you communicate with your clients.

According to J.D. Power, clients who interact with their adviser’s app are more satisfied than clients who don’t use an app or who don’t have one available to them. That said, however, their research reports that clients are less satisfied with the apps used by wealth managers than with other areas of the financial services industry, such as those offered by credit card providers, banks and insurance companies.

App usage during the pandemic is up among younger investors including millennials and Gen Xers. Ensuring that your firm’s app offers clients a robust experience and is both secure and easy to use can give your firm an advantage in building relationships with the next generation of clients expected to benefit from the largest inter-generational transfer of wealth in history.

Sustainable Investing

Investor interest in sustainable investing has been building for a number of years. This interest has continued to increase in 2020 in the wake of the pandemic. Interest from both individuals and institutions in ESG and sustainability factors is growing.

Beyond the interest in ESG factors and sustainability in investing, incorporating these factors into your investment process can help improve client returns. Advisory firms should at least have sustainable investing on their radar screen to ensure they can accommodate clients who have an interest.

Alternative Fee Structures and Service Models

The traditional wealth management adviser fee structure consists of an AUM fee based on a high minimum level of assets. This model doesn’t fit all clients, however. There has been a trend towards alternative service and fee models including hourly and retainer-based fee structures.

The trend toward alternative fee arrangements is in line with demand on the part of many clients for a more holistic approach to financial advice that is based on helping clients achieve their overall financial goals, not just maximizing the value of their investment portfolio. Many in the next generation of clients are looking for different and more collaborative relationships with their advisers, offering a service and fee model that dovetails with these evolving client relationships is a trend that will likely continue over time.

Retirement Concerns

More boomers are hitting retirement age and they have concerns about whether or not they will outlive their assets. Clients need advice not only on traditional retirements, but alternatives such as early retirement and people working full or part-time during retirement.

Clients are looking for more than just some retirement projection numbers run through financial planning software. They are looking for their financial adviser to provide guidance on all financial aspects of retirement, including long-term care alternatives, withdrawal strategies, tax planning and more.

Advisory firms who can adapt to this trend of offering broader retirement financial advice will likely benefit from the “retirement wave” in 2021 and beyond.

The Need for a Succession Plan

The financial adviser population is aging with almost one-half of the current adviser population age 55 and over. This has been an issue for several years, but one that has come to the forefront even more in the wake of the COVID-19 pandemic.

For advisers who are in this age 55 and older group, 2021 is a good time to think about the future of their firm, including a succession plan to ensure that clients are served in the event that something happens to you. This can also be part of your own retirement plan.

One type of succession plan is a merger with another firm. This can be a solid solution for solo or small advisory firms. Another solution is to ensure that you have younger advisers in place who may be interested in buying the firm upon your retirement. This need will continue to grow as the adviser population ages.

The financial advisory business continues to evolve in response to changes in the desires of clients, changing demographics and changes in technology. These trends and others will continue to shape the financial advisory landscape in 2021 and beyond.


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