This year’s Financial Advisor RIA survey revealed that advisors finally are dealing with a challenge that most of American business has been wrestling with ever since the recovery began—growing top-line revenues.
Since 2009, RIAs have enjoyed two strong tailwinds—surging financial markets and demographics. Both could be about to change.
This year, the first baby boomers are turning 70 years old. Even though many say they want to work forever, more than
a few are starting to retire.
That means they will move from the accumulation phase to the decumulation phase. The lucky ones, if they are thrifty or have sufficient assets, will move to a more static world where they can live off their capital. But they won’t have the same amount of new assets coming in like they did in their peak savings years.
Future returns from financial assets always are a wild card. Butmost experts think equities are fully valued, while some think they are slightly overvalued.
Among sound minds, there is legitimate room for different opinions. When it comes to the fixed-income markets, there is no room whatsoever.
One of the strangest developments in this unloved bull market is that people have been buying stocks for income and bonds for capital gains. That can’t last forever and probably not even for very long.
Smart RIAs are looking beyond the financial markets and adding new services to increase their value proposition to clients. Over the next few decades, I suspect the majority of firms will follow suit.
Some, like Massey Quick in northern New Jersey, are dropping their minimums and looking for clients in the emerging wealth demographic. That’s where many clients of the future will be found, and if advisors wait until those clients have a big liquidity event, they’ll find themselves competing against numerous rivals in a proverbial beauty contest.
Others like Brighton Jones in Seattle are moving into late-stage career counseling, or what they call vocational freedom, the financial independence that allows an individual to work at an activity that produces the most psychic income, not the most dollars.