Challenges ahead for advisors and wealth management financial firms

By The IJ Staff | October 23 2018 09:30AM

Improving advisor productivity and performance in the wealth management business will be the challenge for advisors and financial firms over the next several years with higher operating costs expected and the direction of equity markets unknown, says the head of the Investment Industry Association of Canada (IIAC).

In a letter to members, Ian Russell, the president and chief executive officer of IIAC, says there has been an unprecedented increase in savings and accumulation of wealth in the decade since the financial crisis.

But the optimistic outlook for the future of the wealth management business is facing two major threats, Russell states.

The first are higher operating costs and operating margins that have been squeezed significantly.  These costs are expected to go even higher as firms implement compliance requirements for the targeted reforms and embedded fees.

On top of this, companies cannot rely on equity markets to boost portfolio performance and fee increases any longer.

What’s the answer?

The answer, says Russell, is to improve advisor productivity and performance in the wealth management business. 

“Companies have already taken steps to strengthen advisor performance and client relationship-building, giving advisors the tools and products to design high-performing and cost-effective portfolios in the context of a financial plan, and implementing innovative solutions such as online account opening, electronic signatures for documentation, and systems to manage securities orders and processing,” says Russell.

“These efforts have reduced the administrative burden and provided greater client convenience through digitalization of accounts and real-time access to information. Advisors and firms have also offered a broad selection of traditional brokerage accounts, and fee-based transactional and discretionary accounts, as well as self-directed and robo-investing options.”

These products will benefit the expanding needs of the client, but advisors must recognize and be able to clearly state the benefits of these products for the client, says Russell.

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