I’ve long enjoyed the opportunity to help financial advisors (FAs) stay on top of their game. And while our industry’s growth trajectory looks favorable in the coming years, I want to face one industry trend head on.
I was troubled recently to read that advisor engagement is a problem that’s getting worse, not better. As households become evermore responsible for their financial well-being, we desperately need to support the advisors who are essential for helping clients build or protect wealth.
Fuel Tank Near Empty
If you’re an advisor reading this, how often do you get to the afternoon — or even begin your workday — drained of mental power? Take a moment to recall a recent episode of this. Go back to that place. You likely felt fatigued from either meaningful and deep client work or hours wasted on operational tasks that you know you should not be handling. The former situation is natural and often a good thing, but the latter is a sore spot that needs some attention.
Advisors Increasingly Frustrated, Considering Greener Pastures
According to the J.D. Power 2023 U.S. Financial Advisor Satisfaction Study released in July, far too many advisors are struggling to keep up with administrative duties such as compliance activities, backend processes, and just overall grunt work. It has become so difficult to manage that, according to the study, just 30% of employee-advisors and 28% of independent advisors say they “probably will” be working for their current firm in the next one to two years as opposed to saying they “definitely will”. Considering the importance of the advisor-client relationship in driving successful outcomes, that is a concerning trend. A new strategy that reorients tasks might be needed for you and your staff so that turnover does not spike.
Options to Optimize Operations
While the operational side of an advisor’s practice is critical, both RIAs and advisors at large broker-dealers should keep a keen eye on how their time is being spent. Hiring additional workers to help would be great, if the cash flow were there to support paying out a salary and benefits package. There is another option wealth management professionals can take, though. Outsourcing to a capable and expert tech-focused third party might work better. Moreover, in today’s remote-work construct, it’s easier than ever for advisors to expand their staff through key partnerships.
Advisor Frustration Yields Unhappy Clients
I’ll let that seed grow for a minute. Let’s dig further into the troubling stats found in the J.D. Power report. So much effort devoted to administrative items has resulted in an engagement problem. Advisors face the risk of losing connection with their clients. That’s concerning in any industry environment, but it’s particularly perilous today considering that wealth management companies are faced with aging advisors. According to the survey, 28% of FAs say they do not have enough time to spend with their clients, just as one in five claim they are within five years of retirement. Combine a connection gap with major clients and the fact that “their guy” is possibly calling it quits soon, and suddenly a book of business that was once thought to be fortress-like turns into a practice built on a weak foundation.
Older Advisors Eyeing Retirement, Younger Advisors Seeking New Opportunities
Compounding the issue is the fact that younger workers in the industry are on the move. The survey of over 4,000 financial advisors highlights growing job dissatisfaction among those seeking greener advisory pastures. Even among professionals who expressed overall contentment with their current positions, the study found that there was a notable decrease in those employees’ willingness to recommend or endorse their company to peers. This contrasted sharply with a minority of advisors who displayed high confidence in their long-term commitment to their current firm.
Retain Talent With Top-Tier Tech Solutions
Now, is the entire advisory industry in disarray? Of course not. I’m optimistic about the future. Growth is nonstop — I’ve seen that throughout my time at Morningstar, and now, Halo Investing. And with rebounding equity markets, higher fixed-income yields, and a recovering housing situation, investors young and old will need help to manage their assets. Retirees, in particular, will require an experienced pro to craft a risk-management plan along with establishing and managing an income strategy. To do so, wealth managers must possess the best tools to analyze, customize, and execute financial plans.
It’s All About Integration
A big part of my career has been managing emerging challenges when it comes to delivering exceptional investment advisory solutions. It continues to be an exciting space, too, as technology fosters the opportunity to create better portfolio outcomes for investors across the age and risk/return spectrums. Critical to the success of integrating these tech-driven solutions from the advisor’s point of view is educating clients about how protective investments fit in a portfolio context. Advisors must be equipped with the necessary tools to showcase product benefits.
Seeing the Green Shoots
Opportunities for significant growth lie ahead, provided advisors have the capacity. Prioritizing time to do the right things must be the focus in the coming quarters, and client dissatisfaction trends should be taken seriously. Earlier this year, J.D. Power reported a concerning trend — clients’ satisfaction with their advisors has declined. Investor satisfaction had dropped 17% from a year earlier. It is reasonable to speculate that advisors are less happy, leading to increased client frustration, and so goes a troubling cycle for industry practitioners. These data suggest a closer examination of how we can improve the advisor-client relationship and overall service quality.
What Needs to Change at Your Firm?
What can be done to improve this industry wide advisor-engagement problem? How can your firm attract new and committed talent? Have you considered differentiating your service offerings by bringing in subject-matter experts who can take on both investments and time-consuming administrative tasks?
Halo helps clear the clutter for advisors by handling backend workflows that may currently be causing inefficiencies. Our staff becomes an extension of your team, providing effective support where it is needed most. Additionally, teaming up with Halo means gaining access to our innovative, award-winning tech tools, leveling the playing field for smaller firms competing against larger players.
Effective Support & Efficient Solutions Result in Growth
By partnering with Halo Investing, advisors can set themselves apart from their peers by proactively engaging with clients and crafting financial plans rooted in their clients’ values and goals. With many FAs struggling to find the time for hands-on planning and the capacity to grow, a partnership with us can empower your employees, motivating them to deliver the best possible client service.
As the industry grows more complex and time constraints increase, we recognize the importance of providing the necessary help to ensure you and your employees feel empowered and driven to deliver outstanding service to your clients. Together, we can navigate the challenges of the industry and pave the way for your firm’s success.
The Bottom Line
Storm clouds are brewing. We are not talking about a market crash or macro risk that could cause clients to make poor financial moves. Rather, the wealth management profession faces a possible crisis. There are too few advisors today — even before the wave of retirements coming in the years ahead. With one eye on the exit among experienced planners and too many younger advisors dissatisfied with their work situation, support is needed to stymie this trend. Partnering with a staff of professionals whose mission is to boost advisor tech stacks and relieve operational tasks is more valuable than ever.
