Dealing with increased competition and the need to differentiate are the top concerns facing financial advisors, say broker-dealer and registered investment advisor executives, according to a new poll released today by Boston-based Fidelity Investments.
The poll, conducted at Fidelity Investments' annual Executive Forum client event, suggested a number of trends underlie the concerns, including evolving technologies that are challenging brokers and advisors to renew their focus on innovative services and strategies to remain relevant and position themselves for growth.
Sixty-four percent of executives surveyed said the biggest change advisors are grappling with is that investors are more risk averse in the wake of the 2008 global financial meltdown. Twelve percent of executives said the biggest change is that investors are more engaged in the investment process, while 7% cited a desire by clients for greater transparency and increased communication through e-mail, text and social media.
Executives said business realities have also shifted. Compared to 10 years ago, executives said, they're spending 73% more time and resources on risk and compliance, which has taken away from their work on marketing and business development and client services.
"We've consistently heard from our clients that mounting operational demands, the rapid pace of technology change and evolving investor dynamics make it difficult to focus on innovation," said Michael Durbin, president of Fidelity Institutional Wealth Services.
Executives polled said they are dedicating, on average, four hours per week to innovation, which is less than half the time they would like to devote to thinking about new ideas for their businesses.
Thirty-four percent of executives polled said they believe technology will be the primary force that drives industry innovation in the near term, including the use of mobile technology, cloud data storage and services, and social media.
"[Investor's] attitudes and needs have shifted dramatically in the past decade," said Sanjiv Mirchandani, president of Fidelity's National Financial brokerage subsidiary. "To engage the next generation of investors, advisors should consider adopting technology broadly-not only to help transact business and service investors as efficiently as possible, but also to be more transparent, to better communicate and to allow investors to be more involved in the process."
The Executive Forum was held April 30 to May 2 in Scottsdale, Ariz. The survey questionnaire was completed by 118 executives in attendance, all of them clients of Fidelity.
-Jim McConville