Independent financial advisors have clearly defined goals for 2011—they want to gather more clients, mainly through marketing, and they want to improve technology and efficiency in their practices.
What they don’t seem to agree on, according to a recent study from Curian Capital, is whether the recession is over or not. In a study released today, the Denver-based registered investment advisory firm found an almost even split among advisors who believe that the recession is effectively over (42%) and those who do not (46%).
At least at Moss Adams Wealth Advisors in San Diego, Calif., the mood is looking up. “There is a renewed energy and confidence among investors, businesses and colleagues,” Sheryl Rowling, a partner at Moss Adams Wealth Advisors said in an interview on Tuesday. “It is almost like people are tired of feeling down about the economy. They are willing to make investments in their businesses, and they are willing to think about being optimistic.”
Curian Capital also found that 88% of respondents say clients have a risk tolerance that is lower or unchanged compared to one year ago. Clients expressed this sentiment despite the recent equity market rally. That doesn’t mean all clients are cashing in stocks, and hunkering down with bonds. Rowling said more clients have learned that the stock market’s performance is punctuated with performance highs and lows. “A lot of them have moved to a somewhat more conservative allocation, so they can weather those storms,” Rowling said. Also, she said, more Americans see the value of professional advice, and they are not as fearful about the long-term viability of the financial markets.
The clients at Titan Financial Services, based in Washington, D.C., have always taken a very conservative approach to investing, anyway. Most of them had 80% to 85% of their assets in fixed income as the financial turmoil hit in 2008, so they did not take dramatic hits to their portfolios. Instead, they adjusted their spending to get through the last couple of years, said Christopher Franklin, the firm’s chief executive officer. Titan Financial Services has about $50 million in client assets under management, and caters to many professional athletes.
When it comes to business development goals this year, 81% of advisors say they will focus on acquiring more affluent clients in 2011, while 59% plan to market their businesses more aggressively. Curian Capital, based in Denver, surveyed 1,293 independent advisors via email last November. Those respondents hailed from 162 firms.
Franklin sees the value of marketing. Indeed, he said he enjoys getting out and about among clients. But he is just as vigilant about service, as are other financial planning firms that he observes.
“I see that more financial planning firms are turning to mentoring, coaching and counseling clients, as opposed just to selling products,” Franklin said in a telephone interview Tuesday. “At this point, a lot of people out there are holding a lot of money, but my biggest thing is: ‘Are you educated?’”
Franklin believes that as firms try to balance the urge to gather more clients with the need for top-flight, back-office service, some will choose to merge.
Also, Curian found that 62% of advisors say that improving efficiency and overall time management is a major goal for the coming year. Apparently, that goes for client portfolio reviews, as about 74% of advisors say it is important to view all of a client’s holdings on a single platform. Also, 68% of advisors say they want a platform that supports multiple product types.
“Advisors value tools and resources that can help support the marketing and development of their businesses,” according to a statement from Mark Schoenbeck, a senior vice president and chief marketing officer at Denver-based Curian Capital. “Providers will need to focus on ensuring that their support programs are practical, relevant and easily accessible, so advisors can quickly and efficiently grow their business.”
Advisor attitudes—as expressed in Curian Capital’s survey—appear to reflect a general re-tooling of the American economy, according to Franklin. Just as developed societies moved through the industrial and digital revolutions, the American economy is now on a clearly defined path toward a knowledge-and service-based economy.
Some of the findings suggest that advisors are facing the task of getting clients to believe that the equity markets are on firm footing, especially for the purpose of retirement planning. Curian found that 37% of respondents say the majority of the clients they work with are concerned about market volatility. Just 16% of advisors shared this sentiment, Curian found. Meanwhile, 43% of respondents say not generating enough income to last through retirement is the biggest threat to their clients’ plans. Only 36% said their clients felt the same way.
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