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Report

The Evolving Advice Business Model

New survey reveals how advisors are expressing optimism about 2021 and beyond.


This latest in our series of financial advisor surveys reveals how advisors perceive the industry one year since the pandemic began and how they are planning to change their business practices in the months and years ahead.

Emerging from a year like no other, advisors are expressing optimism about 2021 and beyond. Client engagement and business growth are top priorities. In this report, we uncover top product and practice needs that will continue to shape the business model of advice. Pressure is mounting on asset managers to differentiate themselves and deliver more value.

ESG use is increasing. Influenced by increased client demand, 61% of advisors use environmental, social and governance (ESG) products, and usage is even higher among female advisors (71%) and advisors under 40 (67%).

ESG Evolving Advice Image

Advisors are accelerating the customization of the investor experience. 62% of financial advisors use separately managed accounts (SMAs), and 56% of advisors who use SMAs plan to increase their usage over the next two years. Private funds are also options for customization, though they are used more so by advisors with higher AUM (56%).

ETFs continue to grow in popularity. In a continuing trend, 55% of advisors plan to increase their allocation to ETFs over the next two years, most likely from assets in actively managed funds.

Given these — and more — evolving trends, asset managers must achieve differentiation and provide support in order to maintain and grow advisor relationships. Bottom line: Asset managers who understand and inform advisors about the products and trends that are reshaping the market will be best positioned for success.

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