If you’ve spent any time in our industry’s social networks – like #FinTwit on Twitter, for example – you have noticed that there has been a shift in how we talk about investment trend-setting. What once was dictated by financial analysts in suits, our headlines and chat threads are now an echo of what end-investors are talking about.
A direct result of the digitization of financial advice, clients are now more informed about, and have more access to, investment data than ever before. Specifically, data around cryptocurrency and environmental, social and governance (ESG) investing aligned with their interests and values.
The question for firms is: Are you giving your financial advisors the resources they need to be the most informed person in the room?
If not, you may risk losing them.
Over the past year, I have seen a growing trend in advisors wanting to know if prospective firms offer the tools they need to have meaningful conversations about both crypto and ESG with their clients – and I only see this trend getting stronger over the next year. While firms may not be offering ESG funds or crypto trading yet, access to information and a willingness to evolve with investor trends are becoming selling points for firms who want to attract top, client-centric advisors.
“For some, it solidifies their belief that their firm isn’t adapting to the needs of the future by providing them with all available options,” said Torie Happe, head of business development at Onramp Invest, a cryptoasset management solution and education platform for advisors. “When we work with advisors and firms, we focus on the fact that client allocations to crypto are happening whether under their purview or not, and that they need to be educated. Ignoring it can no longer be the status quo. Advisors need to be a resource for their clients who seek information on an asset they so often see in the media.”
According to a study conducted in June 2021 by the Financial Planning Association and the Journal of Financial Planning, about 49% of advisors said clients have asked about cryptocurrency, up from 17% in 2020. These numbers are only getting higher.
On this same trajectory is the more established, yet just as headline-worthy ESG space. According to BlackRock, ESG funds could be a $1 trillion category by 2030 – and advisors are feeling the pressure of keeping up to the client demand.
“Most of the feedback we’re hearing from advisors who are fed up with their current firm’s offering is that they want to do a podcast or blog on ESG in response to their clients’ questions and their compliance departments aren’t clearing them to do so,” said Gabe Rissman, president and co-founder of YourStake, a platform that gives advisors the tools they need to have ESG focused conversations with their clients. “There’s an opportunity right now for firms to be first-movers and offer a suite of ESG tools to their clients – or even just quality education. Most of the large firms and big broker dealers have not caught up, but it’s only a matter of time.”
This response from advisors can only be compared to the “I need a firm that is tech-forward” conversation that started 10-15 years ago. Now that technology has become table stakes, advisors are looking for firms that can support them through these big, headline-grabbing waves of investor trends that seem to only be growing.