Most financial advisors said the Covid-19 crisis will have long-term lasting effects on how their business is done. For one thing, it has shifted their thoughts to more remote working and it also has given them a new lens on their relationships with asset managers, according to a survey by Broadridge Financial Solutions.
The survey of more than 400 advisors, conducted in July and August found that only 10% of advisors report that external wholesalers became more helpful as they dealt with the pandemic-driven impacts on their business. Almost a quarter of advisors (22%) found them less helpful in navigating the impacts of the pandemic. Furthermore, 32% of advisors report that the number of wholesalers they rely on has decreased from two years ago.
According to the study, the top three tools that advisors are looking for from asset managers are investment commentary and ideas (26%), portfolio construction support and resources (22%), and marketing and business-building support and resources (18%). They also expressed an interest in client-facing content (17%) and advisor education (18%).
Advisors also indicated that asset managers could provide frequent economic analysis on how current events may impact the markets.
Matthew Schiffman, principal of distribution insights at Broadridge Financial Solutions, pointed out that as more advisors work from home for an extended period of time, distribution organizations need to adapt their outreach and support strategies in order to meet advisors where they are—at home and online. “The bar has now been raised, and the videoconferencing wall is not coming down. As advisors do more with less, asset managers’ distribution strategies need to keep up—whether that means providing market updates, newsletters, webinars, virtual lunches or even creative insight on acquiring new clients,” he said in a statement.
The study also revealed that many advisors are not hastily returning to the office. And for those who have returned or plan to return, 58% expect to work at least partially remotely one year from now. Twenty percent of advisors are unsure at this point if or when they will return to the office.
Advisors are in no hurry to get back because working from home has been just as effective as working from the office, according to 65%, and 86% report that they have been able to host productive virtual meetings with clients.
Millennial advisors, the report said, have been the most successful during the transition to remote working, with 90% able to host productive virtual client meetings and 77% finding working from home to be as effective as working from the office. And in terms of prospecting, the study found that 77% of millennials have been able to host productive virtual meetings, while only 58% of boomers/seniors say the same.
As for the trends gaining momentum among advisors, the report said model adoption is predicted to further increase at the expense of custom portfolios. Fifty-three percent of advisors plan to increase their use of models over the next two years, while only 4% plan to decrease use.
Also, ETFs and separately managed accounts are expected to gain a larger share of assets under management, at the expense of actively managed mutual funds, the report said, adding that 41% of advisors plan to increase ETFs in six months and 58% in two years. And 22% plan to increase separately managed accounts in six months while 34% plan to do so in two years.
The shifts would come from actively managed funds (38%), cash (20%) and index mutual funds (18), the study found.
The final trend, the report said, is the increase in the percentage of clients in ESG products, which is expected to double from 8% to 16% in two years, while the percentage of assets invested in ESG products is expected to double from 3% to 6%.
The report said nearly one-quarter of advisors have seen client interest in ESG increase during the pandemic, with wirehouse advisors most likely to see increased demand. Also, ETFs are more widely used for ESG exposure within the wirehouse channel and also among millennial advisors.
Advisors remain optimistic even as Covid-19 makes a potentially irreversible impact on the community, the report noted. Seventy-one percent expect to see an increase in assets under management within the next year.