Almost every financial advisor, 93% of Institute members and 93% of advisors overall, offer some sort of retirement income planning services, according to the report. Most IWI members, 80%, offer investment manager due diligence to their clients. However, much smaller proportions of advisors and IWI members offered other financial services.
For example, 62% of IWI members offer cash management or budgeting advice, compared to 56% of advisors overall. Similar numbers offered estate planning services. Fewer than three-fifths of institute members are offering generational planning and just 42% offer elder-care planning.
Few advisors of any stripe—1.9% of IWI members, 5.1% of all advisors—are still commission-only, which the survey authors defined as having less than 10% of a firm’s revenue generated by advisory fees. Slightly more IWI advisors, 2.8%, reported using a mix of commissions and advisory fees, with commissions making up more than half of their revenue. Also, 15.4% of advisors overall are still using a blend of more than 50% commissions and less than 50% advisory fees.
Most advisors—and most IWI members—are deriving the majority of their revenue from fees. One-third of IWI members draw between 50% and 90% of their revenue from advisory fees and 41.6% of the overall advisor survey said the same. An even larger proportion of IWI members, 62%, draw between 90% and 100% of their revenue from advisory fees, compared to 37.9% of advisors overall.
At the time of the survey, 17% of IWI member AUM and 27% of overall advisor AUM consisted of brokerage asset. Both groups project that brokerage assets will decline significantly by 2020, the report said.
Both advisors overall and IWI members also predicted significant changes to the mix of investment products employed in client portfolios. While 37.1% of advisors overall are currently using mutual funds, including liquid alternatives, in their portfolios, that proportion is projected to decrease to 28.6% next year.
Advisors predict that they will also become less likely to use variable annuities: 14.2% claimed to be using them at the time of the survey, while 6.5% expect to use them in 2020. The respondents also said that they would use fewer alternative investments in client portfolios moving forward. Fewer advisors also expect to use other insurance products like fixed annuities, long-term care insurance and variable life products, the report said.
Advisors projected that they would be more likely to use ETFs, individual equities, individual fixed income instruments, money market funds and other cash equivalents, and separate accounts in the future.