SEI Study: Astute Investors May Continue to Shape Advisory Firms in 2020

December 17, 2019

Advisors Share Market and Business Outlooks, Focus on Client Experience in the New Year

OAKS, Pa., Dec. 17, 2019 – A new study conducted by Independent Advisor Solutions by SEI (NASDAQ:SEIC) highlights changing demographics and investor demands as top factors shaping the financial advice industry in 2020. The research explores advisors’ outlook on various market, client and business factors heading into the new year. 

“While advisors have acknowledged the need to adapt the client experience in order to survive in the future and meet evolving investor demands, our research shows the strategy to do so remains an elusive target today for most advisors.”

“While advisors have acknowledged the need to adapt the client experience in order to survive in the future and meet evolving investor demands, our research shows the strategy to do so remains an elusive target today for most advisors,” said John Anderson, Head of Practice Management Solutions at Independent Advisor Solutions. “Despite this, advisors seem optimistic, yet somewhat cautious about the future and the prospects it may bring.”

Market Outlook

  • Advisors expect a downturn within the next one to two years. When asked when they expect the next market downturn, the majority of advisors (42%) said in 2021, while 27% percent believe the downturn will occur sooner in 2020.
  • Geopolitical uncertainty remains top of mind for advisors and clients. Despite the downturn sentiment, only 21% of advisors said a big market correction was the top worrisome factor for themselves and their clients heading into 2020. More than half (64%) cited geopolitical uncertainty, including the presidential election, impeachment, trade war and Brexit, as the top concern. 
  • Client focus on short-term performance is still a challenge. When asked to consider broader industry trends, advisors ranked client focus on short-term performance as one of their top concerns (32%) for their practice moving forward.

Client Experience

  • Customization remains king. When asked how they see the client experience/process evolving over the next five to 10 years, most advisors (32%) said they will customize every client experience based upon specific client needs, while 26% of advisors expect to segment clients by size/need and tailor the experience and services by segment.
  • Advisor goals are not aligned with investor demands. While advisors recognize the evolving investor and need to adapt their client experience accordingly, only 14% of advisors cited improving the investor experience as their top goal for 2020. Similarly, just 11% of advisors chose refining their client niche to help grow their businesses, and only 1% said changing the way they charge fees as a top goal, highlighting the disconnect of advisors’ expectations and their immediate goals for 2020.

Business Outlook and Competitive Landscape

  • Advisors are optimistic about business opportunities. More than half of advisors (62%) cited the ability to articulate their value-add and create new offerings for clients through segmentation and niche identification as a business opportunity they would like to take advantage of over the next one to two years. A similar amount of advisors (56%) said technology to enhance the client experience is the greatest opportunity, with millennial investors looking for advice as the third highest selected opportunity (40%).
  • The future is bright. Almost half of responding advisors (45%) believe it will be easier to grow their businesses over the next five to 10 years, despite their geopolitical and market concerns. Eighteen percent think younger investors’ use of robo or hybrid advice platforms will be a business growth challenge. Meanwhile, just 7% of advisors said the lack of time and budgets for adopting the necessary technology is a hurdle for future business growth.

Methodology

SEI conducted the financial advisor survey online from Dec. 2, 2019 to Dec. 13, 2019. The survey generated responses from 400 independent financial advisors, representing clients and non-clients of SEI.

About Independent Advisor Solutions by SEI

Independent Advisor Solutions by SEI provides independent financial advisors with wealth management services through outsourced investment strategies, administration and technology services, and practice management programs. It is through these services that SEI helps advisors save time, grow revenues, and differentiate themselves in the market. With a history of financial strength, stability, and transparency, Independent Advisor Solutions has been serving the independent financial advisor market for more than 25 years, has 7,400 advisors who work with SEI, and $67.7 billion in advisors’ assets under management (as of Sept. 30, 2019). Independent Advisor Solutions is a strategic business unit of SEI. For more information, visit seic.com/advisors.

About SEI

After 50 years in business, SEI (NASDAQ:SEIC) remains a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of Sept. 30, 2019, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including $335 billion in assets under management and $662 billion in client assets under administration.