Financial advisors may be placing greater emphasis on tax, insurance and life planning in years to come, according to a survey conducted in October at the Fourth Annual Portfolio Management Symposium, which was held by Financial Advisor and Intershow in Orlando, Fla.
The survey found that there were more advisors who felt these services were important than the number who actually provided them.
The survey also found that 34% felt it was "extremely important" to use mostly fee-based compensation in the future. Another 30% viewed it as "very important."
In the case of life planning, 55% of 119 surveyed advisors say they provide the service, while 68% say they will need to offer it to be competitive in the future. Sixty-six percent say they provide tax planning, while 74% say it is important for the future. The figures were 76% and 72% respectively for insurance planning.
In all other areas-investment management and estate and retirement planning-more advisors provided the services than felt they were competitively important in the future.
The survey results were derived from written questionnaires turned in by 119 of the attendees.
Among the other results:
In addition to the 64% who thought it was either extremely important or very important to use fee-based compensation in the future, another 27% thought it was somewhat important, while 9% felt it was not important. Reflecting that view, 62% say they derive income from both fees and commissions, 26% say they are fee-only and 12% are commission-only.
When asked how viable service providers such as Schwab's new advice initiative would be in competing with their businesses, 43% say they view them as only marginally viable. Fifteen percent see them as very viable, 28% as somewhat viable, and 15% say they are not viable competitors.
A majority of respondents, 51%, say they expect their firms' total revenues to be down from a year ago, while 45% expect an increase. Twenty-three percent predict growth will be more than 10%.
The median total asset value of respondents' accounts was $35 million. Twenty-two percent say the value of their accounts is $25 million to $49.9 million, and 29% say the value is $5 million to $24.9 million. Six percent say the value of their accounts is more than $500 million.
The median account size of the average client is $250,000 and the median number of clients advisors serve in a given year is 115. Fourteen percent say their average client has an account size of more than $1 million, while 5% say their average is less than $50,000.
Sixty-six percent describe them-
selves as financial planners or advisors, and 22% as investment managers. Respondents also included securities brokers (5%), insurance agents (3%), accountants (2%) and bank representatives (2%).
Fifty-five percent say they're affiliated with a broker-dealer, while 17% say they are not affiliated and use a third-party provider. Others say they are affiliated with regional, insurance, wirehouse and bank broker-dealers.
The mean income of survey respondents is $184,200, with 6% saying they earn more than $500,000 per year and 27% saying they earn less than $100,000.
The overwhelming majority, 95%, say they provide investment-management services. Slightly less, 91%, say they provide retirement planning, and 75% say they provide estate planning. Seventy-two percent provide insurance planning, 66% provide tax planning, and 55% provide life planning.