
Bank advisors are facing a daunting year ahead. As bank margins have been squeezed in the community banking and credit union space, investment programs and the fee income they bring in has become increasingly important. But those programs are still under stress because of an aging advisor population (many of whom are being offered deals to jump ship and bring their lucrative client book with them), and the difficulty of finding new blood to bring into the business.
To see the challenges facing bank advisors that we outlined last year,
At the same time, there are growing pressures on
For more insight on how big a threat robos really represent,
Some of these challenges may work themselves out in the course of time. Robo advisory firms, suggests Scott Stathis, a principal at Stathis Kucholtz Partners, instead of just being cut-throat competitors of the advisor who offers personal investment advice and services to individual clients and businesses, may get marketed as an added client option. "Some robo companies will inevitably provide their software as a white-label product so financial institutions can brand their own
The free market being what it is, this seems very feasible. But it’s an outcome, he says, that may be a while in coming. Indeed, the robo industry is still young, handling less than 1% of assets under management, according to the consulting firm A.T. Kearney. There is bound to be a shakeout in this industry, says Stathis, but "banks will probably want to wait until that happens before teaming up with any company offering robo services.”
As for the DOL,
Meanwhile though, many banks and credit unions are continuing a trend of pushing advisors into becoming more focused on fee income and financial planning, and less reliant on transaction-based client business. They do this in part, of course, because recurring fee income is more predictable, but also, suggests Ken Kehrer, another principal at Kehrer Bielan, to “try and get ahead of the curve” of the DOL’s proposed fiduciary rule change. A few financial institutions have gone so far as to put their advisors
One bright spot is the first inkling of an easing up of the advisor shortage, with a new report by Cerulli Associates, a Boston-based consultancy, saying that for the first time since 2005, the total number of advisors in the U.S. rose slightly, though that is only likely to happen briefly before a wave of senior advisor retirements kick in.
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