Financial services firms' 2014 plans center on product lines, distribution capabilities and technology, according to a survey done by Cerulli Associates.

"Most companies are operating on overdrive as they seek to expand and grow their businesses, while maintaining an eye on the bottom line," says Cindy Erickson Zarker, director at Cerulli Associates.

Advisors are taking a more pragmatic approach to product development activities, according to the survey done by Cerulli Associates. Firms are generally raising product development budgets only moderately and many product groups that were interviewed by Cerulli are focusing their attention on building assets in recently launched products.

According to the survey, 46% of asset managers plan to launch one to three new products during the next year; only 13% of firms reported that they plan to launch more than six in the next 12 months.

When designing, positioning and establishing new products, advisors need to be aware of how their clients view risk, Cerulli Associates warns. The group found that advisors believe 23% of their clients have an aggressive risk profile -- but only 5% of their clients agree with that assessment. Cerulli encourages advisors to maximize their impact beyond product rationalization and take a more pragmatic approach, such as the use of technology.


Another key area for firms was technology investment, the report found.

"Nearly 30% of survey respondents rated investment in technology as a desired outcome of planned organizational changes at their firms," Zarker says.

Firms need to be embracing technology to reach new audiences, Cerulli found. Because 58% of the millennial generation and 48% of Generation X individuals are more comfortable using websites than financial advisors for financial planning, according to a Harris Interactive survey, keeping pace with a timely digital strategy is critical for advisors, the Cerulli report noted.

Firms are also changing their approach to social media, the report found. Advisors are turning toward social media tools not simply to build brand awareness but as a feedback tool to understand how clients and other discuss their brands.

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