“At LPL, we see the digital trend as an opportunity to create an even better advisor-centered model, led by human advisors and wrapped in a digital-first experience,” she said.
Secondly, advisors will need to focus on expanding their community by looking for growth and new ways to acquire clients. One of the key micro-trends that will create growth opportunities is the growth of female wealth. Jambusaria noted that women are expected to control 60% of the wealth by 2030. This, she said, is driven by the fact that women are living longer and are significant contributors to family wealth. Also, female clients have unique needs and preferences, which are heavily tilted toward trust and personality fit with their advisors.
There are also demographic trends affecting advice, especially when immigrants enter the picture. “Families who are new to our financial system have assets spread across multiple countries and have unique challenges that can be met by an advisor who specializes in their situations.” The 10 million strong LGBT community is another area of opportunity.
Jambusaria said online communities are also increasingly becoming a part of our identity and offer captive audiences that advisors can target for growth. They range from occupation-based groups like physician-moms, interest-driven groups built around things like Peloton fans, values-based groups like Black Lives Matter and faith-based organizations like churches.
The final area advisors should be focusing on is scaling for what is ahead, and that entails setting up their practices to operate with the future in mind, Jambusaria said. And while there is much talk about the tailwinds, there also are a few headwinds that have risen in the industry. Most noteworthy is fee compression.
“Competitive pressures are already starting to reduce advice fees for new clients, and we could see the average advice fees paid by a client decline … from 100 basis points today to 80 basis points in 10 years,” she said. (On a $22.5 million portfolio, say, that can mean a fee drop from $225,000 to $180,000.)
“For advisors who maintain their books through this change but do not evolve their practice, this could result in a decline of annual take-home pay,” she said.
But she noted that leading advisors are getting ahead of this trend by doing more to meet their clients’ expanding needs beyond retirement and wealth. “The broader your value proposition, the harder it is to undercut your fees,” she said.
Emerging areas advisors can explore include financial wellness. Jambusaria noted that health care is the No. 1 expense in retirement, and consumers are looking for help in selecting coverage.
Leading advisors, she said, are effectively serving a larger client base, which often means segmenting their books and in some cases focusing on services like financial planning (at the expense of, say, investment management).
Advisors also need to achieve greater efficiency in their practice, and leading advisors, she said, are regularly revisiting their support model and finding ways to scale day-to-day operations. “Our business solutions are a great way to outsource your needs to an expert who could better help you to run your practice,” she said.