The Future of Advice: Business Models and Services For the Next Generations
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Advised investors | DIY investors 95% said they would still be working with their current financial adviser in 5 years • Typical investable assets: $500,000 • Average age: 54 • 54% male, 46% female • 70% married • 75.9% would prefer to access most or all of the financial services they need online through their financial adviser 73.5% said they would consider using a financial adviser in the future • Typical investable assets: $250K- $300K • Average age: 49 • 56% male, 44% female • 56% married • 72% said they would consider working with a financial adviser if they could deliver most or all of the financial services they need online through their financial adviser n = 453 n = 409
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As technology changes the way investors work, communicate and invest, new opportunities for advisers are emerging. At InvestmentNews Research we wondered: How are clients' financial goals evolving with the times, and how can advisers best meet their needs? We surveyed nearly one thousand investors on their appetites for financial advice, as well as over 500 advisers in a companion survey, posing questions on how they believe their services and business models will change in the near- and long-term. Click through for some of the top-level findings of our research, in what is the first installment of our three-part "Future of Advice" series.
Transcript of The Future of Advice: Business Models and Services For the Next Generations
Advised investors | DIY investors95% said they would still be working with their current financial adviser in 5 years
• Typical investable assets: $500,000
• Average age: 54
• 54% male, 46% female
• 70% married
• 75.9% would prefer to access most or all of the financial services they need online through their financial adviser
73.5% said they would consider using a financial adviser in the future
• Typical investable assets: $250K-$300K
• Average age: 49
• 56% male, 44% female
• 56% married
• 72% said they would consider working with a financial adviser if they could deliver most or all of the financial services they need online through their financial adviser
n = 453n = 409
Need for holistic financial advice not waning
I will need more direct, per-sonalized and professional
advice
I will need less direct, personalized and professional advice
I will not need any professional financial advice, 1.9%
Don’t expect needs to change
How investors who employ a financial adviser believe their need for financial advice will change over the next 5 years
32.0%
9.8%
54%
n = 369 (advised investors) Investors want personal relationships
Characteristics investors value most in their adviser Ability to translate personal needs into a strategy valued highest
Years of experience
Objectivity
Understanding of investment/financial environment
Responsiveness/communication skills
Listening skills
Ability to translate my personal needs into a strategy
Shared values, integrity and trust
10.0%
6.3%
30.0%
6.3%
1.3%
30.0%
10.0%
5.1%
7.4%
28.3%
7.4%
2.4%
32.7%
12.5%
… by age
45+ Under 45
Years of experience
Objectivity
Understanding of investment/financial environment
Responsiveness/communication skills
Listening skills
Ability to translate my personal needs into a strategy
Shared values, integrity and trust
7.8%
10.0%
28.8%
8.7%
2.3%
29.2%
8.2%
4.2%
3.7%
27.9%
5.8%
2.1%
36.8%
16.8%
…by gender
Female Male
Future demand for advisory servicesInvestors: Which services will be most valuable to you over the next five years?
Advisers: Which services will present the largest growth opportunity over the next five years?
Insurance planning
Income tax planning
Investment consulting
Bill payment
Brokerage
Financial plan development
Cash flow planning
Retirement saving
Estate planning
Investment management
Retirement income planning
18.4%
8.6%
9.1%
1.8%
8.6%
25.4%
5.9%
18.8%
23.1%
39.2%
48.5%
10.4%
11.6%
11.8%
12.6%
14.7%
15.0%
19.8%
22.0%
22.2%
23.2%
38.9%
Investors Advisers
n = 441
n = 414 (advised investors)
Investors prefer full-service advisory firms
A solo practitioner / 1 principal An ‘ensemble’ firm / 2-10 principals A full-service advisory firm / 11+ principals
10.1%
29.6%
48.7%
43.6%
36.8%
19.6%
Investors: Which advisory firms do you prefer to work with?Advisers: How many principals does your firm have?
Investors Advisers
n = 495
n = 372 (advised investors)
Methods of client communication evolving
TelephoneEmail
In-person m
eetings
Text messa
ge
Video conference
Socia
l media
US Posta
l Servi
ce
84.1%
76.1% 78.0%
3.6% 3.8%8.2% 8.8%
63.7%69.1% 68.1%
8.4%
31.5%
17.9%
4.8%
Advisers: What do you/will you rely on for direct, personal communication with clients?
Currently In 5 years
TelephoneEmail
In-person m
eetings
Text messa
ge
Video conference
Socia
l media
US Posta
l Servi
ce
79.5%74.6%
61.1%
5.7%0.8% 1.4%
13.2%
66.9%
78.8%
57.8%
10.5%
19.4%
2.7% 5.4%
Investors: What will you rely on for direct, personal communication with your financial adviser in 5 years?
Currently In 5 years
n = 373 (advised investors)n = 477 (advisers)
Investors increasingly favor mobile devices• Investors own smartphones at a higher rate than any other
consumer electronic device
• Tablets owned at equal rate as desktop computers
• 76% of investors under 45 access financial information on smartphone, vs. just 46% of those 45+
• 95% of investors under 45 own smartphone
Cellphone (not a smartphone)
Smartphone Tablet Desktop (PC) Laptop
22.1%
83.8%
63.2% 63.1%
83.2%
7.1%
54.8%
43.3%
57.5%
72.3%
Investor device usage
Use regularlyUse to access financial account information
Under 35 35-44 45-54 55-64 65+
95.8% 94.4%85.7%
78.2%69.3%
82.5%
71.9%
56.4%
42.0%35.8%
Investor smartphone usage, by age
Use smartphone on a regular basisUse smartphone to access financial account informationLinear (Use smartphone to access financial account information)
n = 988 (all investors)
Female investors more active on social media
Blogs
Google+
6.5%
4.7%
14.2%
18.1%
26.1%
34.3%
82.3%
11.3%
12.2%
18.6%
21.0%
26.9%
41.2%
80.1%
Social networks used for professional purposes, by gender
Women Men
Younger investors look to greater variety of sources for investment & financial informationAmong respondents who have a financial adviser
n = 496 (advised investors)
Financial newspapers or new websites
Personal finance websites
Financial television news networks
Personal financial adviser
Social networks Friends, family Financial institutions (your bank, 401(k) provider, brokerage
firm)
47.0%
16.0%13.0%
50.0%
8.0%
18.0%
27.0%
41.4%
11.6% 9.6%
65.7%
1.3%
8.6%
36.9%
Primary sources of investment and financial information, by age
Under 45 45+
Investors over 45 more likely to pursue interactions via their adviser’s website
Look up my account value
Schedule meetings with my adviser
Send messages to my adviser
Review all of my financial information in one place
Maintain a ‘vault’ with important papers and reports
Update beneficiary information
Read my adviser’s blog, newsletters or financial planning updates
62.7%
10.2%
13.6%
39.0%
13.6%
15.3%
23.7%
70.4%
8.8%
27.3%
45.8%
6.5%
15.3%
33.8%
How do you use your adviser's website?
45+ Under 45
DIY investors aren’t flocking to robo-advisersHow DIY investors invest their money, by age• Only 6% use automated investment
service
• Overwhelming majority have a retirement account, whether an IRA or employer-sponsored.
• Online brokerage and bank savings accounts popular instruments.
Through an automated investment service
Through a self-employed plan
Through college savings plans
In bank deposit instruments
Through an online brokerage
Through an individual retirement account
Through an employer sponsored retirement plan
6.2%
9.6%
12.4%
29.8%
33.1%
41.6%
62.4%
5.9%
15.4%
11.9%
38.1%
41.6%
46.5%
59.1%
45+ Under 45
