Professional Adviser: The role of financial advisers: Helping secure the future

By harnessing the benefits of goals-based financial planning, leveraging the right technologies, and ensuring clients have access to diversified portfolios, advisers can help secure the future for millions of people, writes Ian Love.

In an era marked by economic uncertainty and market volatility against a backdrop of increasing lifespans, a key concern for many is their future financial security.

More than ever, advisers have an opportunity to differentiate themselves in helping clients navigate this storm while keeping a steady eye on the horizon to achieving their financial goals.

The human factor

Investors' behavioural biases often become most prominent—and potentially problematic—when the market is tumultuous. Natural tendencies to question long-term investment strategies and overthink market shifts can lead to irrational decisions.

Biases can affect investors' thinking, and financial advisers can help by taking time to understand clients' biases and how they impact financial decisions—from their own perspectives and their clients'. By coaching through biases and focusing on a goals-directed investment approach that allows clients to focus on long-term goals, advisers can help clients keep calm and have a more holistic and future-oriented perspective of their investments.

Advisers are able to take a more objective approach to a client's goals and what's needed to reach them. That said, financial advisers must take stock of their own unconscious bias. By seeking out diverse perspectives, using evidence-based decision-making, and carefully exploring their clients' behaviour, advisers can guide their clients with confidence, ensuring the impact of behavioral bias is mitigated.

The power of diversification

Many translate market volatility as risk. And advisers serve as a gateway to more sophisticated investments that may suit longer-term investment strategies.

Investments in alternatives, which show lower levels of correlation to short-term price movements, have become increasingly important during periods of volatility. Beyond traditional asset classes like stocks and bonds, alternatives such as real estate, commodities, and private equity could offer opportunities for portfolio diversification and risk mitigation.

Even with increased access to alternatives, there is still a lack of understanding and awareness of this asset class among both advisers and investors. For this reason, advisers have an important role to play in educating clients, and oftentimes themselves, on the full investment spectrum. It is only through expertise that advisers can help their client receive the potential benefits of increased diversification and enhanced returns.

Tech as an enabler

As investors move through different life stages, their risk profiles shift, with a lower tolerance for market volatility and a shorter time horizon to recoup potential losses. Having the right technology infrastructure in place is critical for advisers to help their clients through this journey and understand their progress to their financial goals.

Technology has undoubtedly revolutionized the way financial advisers approach client interactions and financial planning. With the increased demand for a modern, on-demand wealth management experience, advisers need to bolster their value proposition with the digital tools and data that can personalise the experience—and outcomes—to each client's unique circumstances.

Integration of technology systems and data can provide the antidote to uncertainty: Knowledge. Delivering real-time data across an adviser's business and a client's entire financial picture translates into valuable insights. And that full-picture information enables confident decisions about both the future of their wealth and the future of the business.

When it comes to wealth, there's nothing more important than security. Clients knowing how and where their assets are protected goes a long way in building trust. And it's not just about the security of their assets—it's also about the security of the firm's data. A strong data strategy and cybersecurity helps ensure an adviser's ability to aggregate, report, and protect it.

Future-proofing tomorrow

Careful planning, steadfast guidance, and a commitment to long-term financial well-being are paramount for financial advisers, who can serve as trusted partners, offering expertise, empathy, and technology that help clients better navigate their financial preparedness. By harnessing the benefits of goals-based financial planning, leveraging the right technologies, and ensuring clients have access to diversified portfolios, advisers can help secure the future for millions of people.

Important information
Information provided in the U.S. by SEI Investments Management Corporation, a federally registered investment adviser and wholly owned subsidiary of SEI Investments Company.

Information issued in the UK by SEI Investments (Europe) Limited, 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR which is authorised and regulated by the Financial Conduct Authority.

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein.