Advisers want to plan more, manage investments less, says Fintech Exec

A majority of financial advisors want to spend more time doing financial planning for clients and less time managing investments, according to Matt Schiffman, principal of distribution insights at Broadridge Financial Services, a financial technology company in Lake Success, NY

“We’re observing a demonstrative shift in how advisors want to spend their time,” Schiffman said in an interview. “Sixty-two percent want to spend more time on client-facing activities and 42% want to spend more time on client acquisition and less on managing money. Advisors are rethinking their value proposition, and 43% said they want to spend more time focusing on holistic financial planning.” Schiffman drew the examples from Broadridge’s recently released first quarter 2022 radar report

“Younger advisers in particular are focusing on financial planning rather than direct investments,” he said.

“The use of investment models is becoming more widespread instead of customized accounts,” he added. “One trend is related to the other. The tailor-made accounts are only marked for the most advanced customers.”

Time constraints drive these shifts. “Especially with everything that’s happening now in the world and in the markets, advisors are engaging clients on a holistic level and delegating the investment part of the service to a third party, which they monitor,” Schiffman said. “The future of financial advice will be shifted to be even less about investments and more about overall financial planning.”

The products that attract investors’ interest are also changing, according to Broadridge. Liquid options and commodity products attracted record inflows in the first quarter, with liquid funds registering their fifth consecutive quarter of net inflows.

Although some asset classes continued to register growth in the current chaotic market, almost all sub-advisers saw assets decline during the first quarter due to the difficult market environment, the report said.

“Year-over-year growth rates are now mixed with some up and some down, but the environment favors passive sub-advisers and those investing with a value style,” Broadridge said. At the same time, it appears that “the systematic and disciplined rebalancing that is the hallmark of models has ultimately protected investors from steeper and more painful losses during the market turbulence of recent quarters.”

Mutual funds, with a total of more than $26 trillion in assets, will always play an important role in savings and retirement planning, but product innovations have given investors more options than ever before, and the venerable mutual fund faces stiff competition in the future, Broadridge said.

The Broadridge report showed that with asset levels across all channels off record highs, advisers and managers were repositioning clients to newer and less traditional products to fill the revenue void. For example, investors pay more attention to funds with a climate theme.