In 2020, the financial services industry faced a range of challenges that disrupted the sector and the entire economy. With the COVID-19 pandemic changing the way investors interact with their Financial Advisor (FAs), there’s been a shift in the way financial institutions operate, as well as the advisor-client relationship. Despite the volatility of the market last year, the top FAs in the US have still managed to thrive.
Despite the uncertainty, FAs have been highly in demand. More people want extra clarity over their investments due to the volatility of the market.
The impact of technology
There’s no shortage of innovation in the financial advice markets. Virtual meetings were already on the rise well before the pandemic struck, but they’ve now become a cornerstone of modern business, and have played a key role in building stronger relationships between financial advisors and their clients. As it can often be difficult to find time to meet clients in person, the use of virtual meetings has paved the way for more efficiency, making it easier for people to connect. Financial advisors and their clients can schedule meetings using cloud-based tools, like Zoom and Microsoft Teams. There are also tools like DocuSign that enable a way to sign documents electronically, which greatly compliments the new world of work.
The rise of remote work and virtual meetings presents a new opportunity for financial advisors to become more flexible and to provide a more in-demand service for their clients. Like most businesses, financial advisory companies are having to adapt to and find new ways to engage with potential clients in a time when there’s been a great deal of uncertainty. It’s therefore important that businesses continue to be proactive, find solutions and plan ahead to overcome the challenges of today’s economy.
What is very interesting is that many FAs chose to move firms in 2020 and we see that trend continuing. In 2020, a few smaller firms actually had their best recruiter year ever not just in the T-12 they hired, but also the success of new FAs bringing over their book of business. We attribute this to a number of factors.
Client communication in the age of remote working
First as mentioned above, despite not being in face to face meetings with clients, the FA/client relationship was further solidified during 2020 as many people were looking to their trusted advisors to help them through 2020, with FAs obviously being in this group. The wealth management business, especially for the high net worth client, is still about having that personal connection and the trusted advisor in an FA.
Additionally, despite not be able to see clients, many advisors have said that clients have been easier to contact, since they’re at home and not traveling anywhere. As mentioned with the aid of technology and the availability of clients have made conversations easier to have. So back in the olden days when an FA would move to their new firm on a Friday afternoon, there would be a mad dash to get the ACATS forms out the door. The “losing” firm would reassign the accounts and make the calls to try and convince clients to stay. This is always hard as the new FAs don’t have that personal connection, but we think that has been even more difficult in a time where the new FA is not able to meet the clients in person. In summary, all the technology, uncertainty, and connectivity (or lack thereof) have contributed to the success of FAs bringing over their book to their new firm.
Hanover has the expertise to help you
Financial advisors need to continue to make sure their clients are satisfied with their services, but with the ongoing trends in the market, there’s no doubt that the future of the industry looks to be a promising one. At Hanover, we have a deep understanding of the finance and wealth management sector, and managing partner John Chudzik has decades of experience working with financial advisors.
