Survey: Advisors ‘Overwhelmingly Positive’ About The Future

A survey of registered investment advisors and fee-based advisors finds that most of them are focused on the long term, embrace technology and are not particularly worried about the “roboadvice” movement.

Results are included in the first “Advisor Authority Executive Report,” by Jefferson National, distributor of the popular Monument Advisor suite of variable annuities.

Among the highlights of the survey:

Advisors are “overwhelmingly positive” about the future; focused on investing for the long term; serious about new technology; preoccupied with software integration in their business; not nearly as obsessed with the roboadvice trend as some headlines would have you believe; and above all want answers to mitigate market volatility.

The survey was conducted online by Harris Poll in April 2015 and polled more than 500 financial advisors nationwide.

A resounding majority of advisors – 81 percent – said they believe the profitability of their practice would increase in the next 12 months, a sign of a robust prospecting pipeline, according to the survey released earlier this month.

Advisors are also bullish on mergers and acquisitions activity, with 65 percent of respondents saying consolidation among RIAs will increase in the next 12 months and 53 percent saying mergers will have a positive impact on their business.

More than half — 57 percent — said they planned to integrate new software into their practices in the next 12 months, the survey found.

In addition, 52 percent said they planned to integrate mobile applications into their practices in the next 12 months, and 48 percent said they planned to integrate cloud-based technologies into their practices.

On the hardware side, 49 percent said they planned to integrate smartphones and 49 percent said they planned to integrate tablets into their practice in the next 12 months.

Only 21 percent said they planned to feature roboadvice — a computer algorithm to make investment decisions — into their practice, the survey found.

Indeed, the survey found only one-third of advisors who are familiar with roboadvice and 19 percent of all advisors use any type of roboadvice, the survey found. Roboadvisors are widely seen to be a way to upend traditional advisor pricing models.

“I would have though there was a higher level of awareness,” Mitchell H. Caplan, CEO of Jefferson National, said in an interview with InsuranceNewsNet.

Advisors are roughly evenly divided about whether the roboadvice model poses a threat to their practice, with 48 percent answering no, 42 percent saying yes, and 11 percent who are not sure, the survey found.

The survey reveals a link between financially successfully advisors and their familiarity with or use of roboadvice for certain segments of their clientele, but the trick is to integrate the roboadvice channel into the advisor’s overall investment platform.

“The way to think about it is, I suspect, that in some ways the roboadvice movement has been mischaracterized,” said Caplan, former CEO of ETrade Group. “It’s not advice but rather a low-cost execution arm for investing.”

Advisors, no matter how successful, transmit seem to be transmitting a clear signal that computer algorithms are no substitute for flesh and blood advisors who dispense the right kind of advice to build and plan for the future.

At LPL Financial’s Focus 2015, LPL President Dan Arnold was reported as saying that roboadvisors would not replace financial advisors, but that they will win certain client segments and be “disruptive to pricing.”

LPL Financial said it would launch a roboadvisor pilot program in September.

InsuranceNewsNet Senior Writer Cyril Tuohy 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.