A majority of financial advisors want to spend more time on financial planning for clients and less time managing investments, according to Matt Schiffman, principal for distribution insight at Broadridge Financial Services, a financial technology company in Lake Success, N.Y.
“We are observing a demonstrative shift in how advisors want to spend their time,” Schiffman said in an interview. “Sixty-two percent want to spend more time with client-facing activities and 42% want to spend more time on client acquisition and less on managing money. Advisors are re-evaluating their value proposition, with 43% saying they want to spend more time focusing on holistic financial planning.” Schiffman was drawing the examples from Broadridge’s recently released 1Q 2022 Radar Report
“Younger advisors in particular are focusing on financial planning rather than direct investing,” he said.
“The use of investing models is becoming more prevalent rather than customized accounts,” he added. “One trend is related to the other. The bespoke accounts are only crested for the very high end clients.”
Time constraints are driving these shifts. “Especially with all that is going on now in the world and the markets, advisors are engaging clients on a holistic level and delegating the investment piece of the service to a third party, which they are overseeing,” Schiffman said. “The future of financial advice will be shifted to even less about investments and more about overall financial planning.”
The products gaining the interest of investors also are shifting, according to Broadridge. Liquid alternatives and commodity products attracted record inflows in the first quarter, with liquid funds registering their fifth consecutive quarter of net inflows.
Although some asset classes were still registering growth in the current chaotic market, nearly all subadvisors saw assets decline in during the first quarter due to the difficult market environment, the report said.
“Year-over-year growth rates are now mixed with some up and some down, but the environment favors passive subadvisors and those investing with a value style,” Broadridge said. At the same time, “the systematic and disciplined rebalancing that are the hallmarks of models appears to have ultimately protected investors from steeper and more painful losses during the market turbulence of the past several quarters.”
Mutual funds, with a total of more than $26 trillion in assets, will always play an important role in saving and retirement planning, but product innovations have given investors more options than ever before, and the venerable mutual fund faces stiff competition in the future, Broadridge said.
The Broadridge report showed that with asset levels across all channels off their record highs, advisors were repositioning and steering clients to newer and less traditional products to help fill the income void. For instance, investors are paying more attention to climate-themed funds.