Advisors worried about profitability as pandemic continues
Study finds advisors are looking to technology to help serve clients.
Financial advisors have not escaped the system-wide shocks of COVID-19, according to a study by the Nationwide Retirement Institute. The sixth annual Advisor Authority Study found just 54% of financial professionals expect to increase their profitability this year, compared to 75% in last year’s study. Of those who expect profitability to fall, 68% blame it on COVID.
Related: 3 vital best practices for retirement plan advisors
“When advisors and financial professionals think about the success of their practice over the next 12 months, they think about the impact of COVID-19—and we understand their concerns,” said Craig Hawley, head of Nationwide’s Annuity Distribution.
Nationwide surveyed 1,800 advisors, financial professionals and individual investors to determine the impact of the coronavirus on financial firms.
Advisors are looking to technology to get them through the pandemic. One in five advisors say adding new technology is the most important thing they can do to increase profitability, including self-service tools for clients (26%) and remote work tools for employees (24%).
Related: Is your WFH technology at risk? – With Charles Henson
Risk management tools have long been advisors’ most desired tech investment, according to the study, and risk management tools are clearly still important, as 34% of advisors included them in the tech investments they were most interested in.
However, in a sign of advisors’ reduced ability to meet with clients in person, nearly 40% say they are most interested in adopting e-signature capabilities. Underscoring the study’s findings regarding client self-service, 34% of advisors are looking to add mobile tools and apps, and 31% are interested in launching an interactive website or client portal.
“By re-tooling with the right technology, advisors and financial professionals can continue delivering an exceptional client experience, retain current clients and attract new ones, ensuring their practice and profitability can withstand the outsize challenges of this pandemic,” Hawley said.
Other findings show advisors are split when it comes to what technology they should offer:
- Advisors of all ages agree that digital tools for their clients are important, but millennials (31%) were far more likely than Gen X (22%) and boomers (11%) to prioritize remote-work tools for their employees.
- Boomers lag in adoption of AI and data analytics, with just 13% saying they will adopt these tools, compared to 27% of Gen X and 33% of millennials.
- Financial planning tools like robo-advisors and tax optimization software are more popular with younger advisors. Between a quarter and a third of Millennial and Gen X advisors say they will adopt these tools, compared to 19% of boomers who are interested in tax optimization software and just 4% who are OK with adding a robo-advisor to their offering.
READ MORE: