So investors are likely to interact with their financial professionals through multiple channels—mobile devices, telephone and face-to-face. he said, adding that consumers are expected to be increasingly looking for such contact.
While they seek more sophisticated advice through multiple channels, consumers are also becoming more interested in simpler, lower-cost investments like index funds.
While many active managers will be pressured by lower fees and criticisms of their funds’ performances, those who successfully beat their benchmarks may still play a role in the portfolios of the future, said Kallsen.
“More and more consumers want it easy, predictable, and they want low costs,” Kallsen said. “Consumers are becoming more educated about fees. This is driving different behaviors now and this will drive different behaviors in the future.”
The financial industry may be vulnerable to disruption because consumers are becoming less sensitive to brands. Kallsen said that declining brand loyalty will lead consumers to consider alternative advice providers and products that are more transparent, easier to use and of greater value.
“What’s important for us as an industry is that we listen to what the clients want and we innovate on their behalf,” Kallsen said. “We need to be the disruptors in our industry.”
To do so, financial firms must realize that fee awareness and fiduciary expectations will probably grow regardless of the regulatory environment, said Kallsen.
“[Clients] want to be able to keep more of their money in investments versus paying a fee for things that aren’t necessarily outperforming,” Kallisen said.