I find myself in a front-row seat every day as I speak with leaders of major financial institutions about their strategies for advancing their businesses and our industry.
Reflecting on our conversations, I see five trends in the race to improve financial advice, described here and on my latest WealthTech on Deck podcast.
1. More people are retiring than ever and want and need advice. As many as 12,000 people turn 65 each day. They have more assets than any previous generation, and their millennial children will have even more.
Just as boomers have changed everything, they are redefining retirement. Many left their jobs in the pandemic, although some appear to be returning to work. They continue to redefine retirement. Here’s a hint (and latest buzzword): they want it “hyper-personalized.”
Their financial circumstances are complex. Many have an array of taxable and tax-qualified accounts, life insurance, annuities, and real estate. And no generation feels more responsible for their financial outcomes and retirement income than these folks.
More money is pursuing the best advice. This will last for decades to come.
2. Investors will move beyond the shiny object syndrome to household-level management. The unrelenting pattern I’ve observed over 40 years—of investors buying high, selling low, and falling for the latest-greatest products—must and will cease.
Investors too often do the wrong things, whether with mutual funds, tax shelters, annuities, managed accounts, tech stocks, day trading, exchange-traded funds (ETFs), representative as portfolio manager (rep as PM), crypto and direct indexing.
Many of these products have their place, but none is a silver bullet. To help them maximize retirement income, advisors are challenged to coordinate multiple holdings, accounts and products, factor in costs, risks, and taxes, and optimize Social Security benefits.
We must lead investors toward coordinated household management for their own good—and yours.
3. Workplace retirement, wealth and asset management, annuities and alternatives are converging. Tomorrow’s clients begin their retirement journey today through workplace plans. As their assets grow, they start understanding the value of advisory services. Increasingly, they seek an all-inclusive approach to financial well-being that advisors must be able to provide.
Morgan Stanley is out in front on this, with other firms in pursuit: J.P. Morgan, Orion, Edward Jones, Wells Fargo, UBS, Merrill, Envestnet, Goldman Sachs, LPL and many more.
It takes billions of dollars—and vision—to develop platforms that put advisors in the position to provide truly holistic advice.