U.S. financial professionals expect their assetsunder management to increase by 7.2% over the next 12 months, withannualized growth of 17.2% over the next three years,Natixis Investment Managers recently reported.

Nine in 10 advisors think this growth will be driven by newassets from new clients, and four in five say it will be drivenby new assets from current clients. Only 55% are countingon market returns as a primary growth driver.

These findings were based on a survey of 300 U.S. financialprofessionals with $29 billion in assets, who were one segment of aglobal survey conducted by CoreData Research between March 16 and April 24 among 2,700wirehouse advisors, RIAs and independent broker-dealers with $135billion in client assets in 16 countries andterritories. 

Other findings from this survey were published June 16.

Despite their optimism for their practices, 84% of U.S.financial advisors acknowledged that business development was achallenge. Consider that in a typical work week, they dedicate amere 9% of their time to prospecting for new clients.

Fifty-one percent of their time is spent meeting orcommunicating with current clients, 15% is divided betweeninvesting or reallocating client investments and 23% is devoted togeneral administration, marketing, compliance andeducation/reading/social media.

How, then, to grow their practices? The skills advisors saidthey most needed to improve on were:

• Getting to know clients' next-generation heirs – 53%
• Preventing clients from making emotional investment decisions –46%
• Demonstrating value beyond portfolio construction – 41%
• Managing client return expectations – 37%
• Communicating with clients – 28%

Asked why investors would leave their financial advisors, 69% ofrespondents cited failure to communicate with clients in a way theyexpected, and 64% said not listening to clients.

Only 27% put client departures down to a failure to meet theirreturn expectations.

"Advisors are adapting their business to align with anticipatedgrowth opportunities, and the path to profitable growth isn'tlikely to follow the status quo," DaveGoodsell, executive director of Natixis' center for investorinsight, said in a statement.

"To win assets, advisors need a keen understanding of howclients' needs and expectations are evolving. At the same time, oneof the most important roles for advisors is setting realisticexpectations for their clients, and more actively planning to reachthe goals of both the client and their next generation heirs."

Planner, financial coach, therapist

In the past, financial professionals succeeded by puttingthemselves forward as experts at selecting investments and managingclient portfolios.

Today, the survey's findings suggest, they are reframing theirvalue propositions as clients seek a wider array of investment andnon-investment-related services.

Sixty-one percent of U.S. advisors surveyed said that over thepast year, they had seen increased demand for planning, especiallyfor retirement income and planning.

Other services they said clients wanted more of were estateplanning, tax-efficient investment and wealth structuringstrategies, lending and credit solutions and help with financialeducation for other family members and heirs.

Seventy-two percent of respondents said they now viewedthemselves as planners whose primary role was to help clientsnavigate all their financial needs, not just their investmentportfolios.

Fifty-nine percent described themselves as a financial coach,and 44% saw themselves more of a therapist by helping clientsunderstand their relationship with money and the emotional driversof investment decision-making.

Just 35% identified themselves primarily as a portfolioarchitect.

Advisors up their game 

Sixty percent of advisors in the survey said their main sourceof competition at present was other traditional financialprofessionals, while 18% said it was the availability of improvedtools for self-directed investing and 9% cited automated adviceplatforms.

However, they recognized that change was afoot in theindustry.

Twenty-five percent said that in five years, they expectedincoming competition from traditional financial professionals, andanother 25% said it would come from new entrants, such as bigtechnology companies and other innovators within and outside thefinancial industry. Twenty-four percent cited self-directedinvesting tools and 23% automated advice platforms.

To best position themselves, financial professionals are focusedon differentiating their practices through amplified client servicetechniques and strengthening the longevity of their existing clientrelationships.

Some three in five respondents said a hallmark of the mostsuccessful advisor-client relationships were knowing clients on apersonal level and communicating regularly. Two in five saidbuilding relationships with clients' families was a hallmark ofsuccess.

As they continue working to improve client service, advisors areseeking greater efficiency in their practice:

• Leveraging technology, such as relationship management tools –51%
• Streamlining their client base – 46%
• Segmenting clients, by age or wealth level, for example –40%
• Specializing in niche client groups, such as doctors anddivorced people – 36%

Investing strategy

Nearly all U.S. advisors surveyed said that rather than buildall their clients' investment portfolios from scratch, theyinvested at least a portion of their clients' assets in modelportfolios designed to achieve an expected return withcorresponding risk.

Two-thirds of model portfolio users said they did so because itmade scaling their own business easier. Other benefits they citedincluded making client reviews more efficient, loweringadministrative burdens, increasing time available to serve currentand prospective clients and accessing investment expertise.

"Investing involves a balance of efficiency, creativity andconsistency, and that's what we are seeing as more advisorsincorporate a mix of model portfolios and customized or alternativestrategies into client portfolios," Marina Gross,executive vice president at Natixis Investment Managers Solutions,said in the statement.

In terms of asset allocation, 79% of surveyed advisors allocateda portion of client assets to alternative investments, 68% of theserelying on real estate strategies.

Advisors who used models had an average 55% of their book ofbusiness in their own models, 24% in their firm's proprietary modelportfolios and 21% in external or third-party asset managermodels.

Faced with market uncertainty and continuing volatility, 81% offinancial professionals said the current market was favorable foractive portfolios, with an average 68% of client assets in activelymanaged investments. Two-thirds said they intended to maintain ahigh level of active exposure over the next three years.

Seventy-one percent of advisors each believed active managementadded the greatest value to less covered asset classes, such assmall-cap equity funds, and to emerging market funds. Roughly halfeach said active management added value to bond funds, alternativesand large-cap stocks.

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