Many Rich In Assets, Lacking In Vision

By Cyril Tuohy

InsuranceNewsNet

The 2013 Fidelity Advisor Insights Study by Fidelity Investments finds that 95 percent of advisors grew their books of business last year when the stock market turned in stellar gains and interest rates were on the rise.

Even with a strong year during which the Standard & Poor's 500 index rose by 30 percent, many advisors appear to lack foresight about how to capture a new generation of younger investors, according to the Fidelity study.

“Business has been good for advisors, but it’s important they don’t put off what’s needed to ensure the future looks just as attractive,” said Brian Nelson, vice president of practice management at National Financial, a division of Fidelity Investments.

With average assets under management (AUM) of $62 million, and with average compensation at $240,000, advisors participating in the survey are still coming up short with regard to positioning themselves for the future.

The study also found that 66 percent of the respondents did not have a multiyear plan in place and nearly half did not set formal career goals for themselves, 43 percent did not feel a need to meet the needs of younger investors, and 66 percent said they believe they stand out giving clients personal attention.

The data for the Fidelity Advisor Insights Study was collected online between August 8 and 21, from 813 advisors representing different types of advisory firms, and who manage a minimum of $10 million in individual or household investable assets.

Even as millions of today’s Generation Y investors stand to become advisors’ future bread-and-butter clientele, advisors don’t seem to be paying enough attention to them, the survey found.

Younger investors often don’t have enough wealth to make it worthwhile for advisors. Even so, Gen Y investors are poised to be different from their Generation X predecessors and baby boomers starting to move into retirement.

As many as 43 percent of advisors did not feel it was important to evolve their practice to meet the needs of a younger population, the survey found.

The Fidelity study also found that high-performing advisors are serious about planning and setting clear career goals, with 63 percent of high-performing advisors having formal career goals – especially around business continuity and succession planning.

Compared with other advisors, high-performing advisors are more focused on wooing younger clients, with 42 percent of high-performers targeting Gen X and Gen Y, compared to 17 percent for other advisors.

The Fidelity survey also found that high-performing advisors differentiate themselves by joining with other advisors, adopting technology and customizing services.

As many as 67 percent of high-performing advisors tailored their approach compared to 58 percent for other advisors, and 52 percent of high-performing advisors are willing to invest in technology compared to 35 percent of the rest of the advisors, the survey found.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.