No. 4: Take ESG Investing Seriously
Younger investors and women are most likely to demand investment options that are socially or environmentally responsible, says Pace -- they're also a prime source of new assets for advisors.
“If you look at the demographic footprint of women and younger investors, something like $1 of every $6 is going into a socially responsible product,” Pace says. “As the industry moves into those demographics, advisors have to have an answer for their desire to make socially conscious investments.”
A relatively recent ruling by the DOL has paved the way for environmental, social and governance (ESG) funds to be included in 401(k) plans.
“The Trump administration’s position on ESG remains to be seen, but these trends are catching on, particularly with millennials,” says Sommer.
No. 5: Innovative Value-Added Services To Attract And Retain Clients
Sommer notes two little-known opportunities for advisors to create some differentiation with risk management and planning with stock protection funds and digital estate planning.
“A group of accredited investors all with different concentrated positions contribute cash to a pool,” Sommer says. “The pool is invested conservatively, and after five years, the cash is used to offset losses incurred by investors on their positions. If no losses are incurred, the investors received their cash back, but during those five years investors continue to hold their stock, collect dividends and participate in all of the appreciation. Since the stock is unencumbered, it can still be sold at any time.”
While it may take some time for stock protection funds to become available on advisor platforms, independent advisors may find them to be helpful tools for high-net-worth investors who need to manage the downside risk of concentrated positions.
Advisors should also look more closely at some of their already existing services to find opportunities to add value.
Sommer says that advisors who engage in legacy planning might want to consider offering services that would help clients take care of their digital assets as part of their estates.
“According to at least one online survey, the average person has around 90 online accounts, and there are often no provisions that address access should the client become incapacitated,” says Sommer. “The key point is for advisors to suggest that their clients update their estate plan to address for their online accounts and relationships.”