2022 was a dynamic year in wealth management. A down economy. High inflation. Sluggish equities and bond markets. Rising interest rates. These factors created both challenges and opportunities for financial advisors and their clients.
Distressing economic conditions persist, and the future remains uncertain. As a result, specific trends have emerged in the first two quarters of 2023. These and other trends will likely continue the rest of the year—and beyond.
Not surprisingly, technology is at the center of most of them. Sometimes, tech itself is driving the latest industry changes. Other times, it helps wealth managers navigate the most influential challenges and opportunities.
A record 119 merger and acquisition (M&A) deals closed in the first half of 2022. This was a 47% increase over the same period in 2021. Wealth management firms are rushing to remain competitive, reduce costs and improve their bottom lines. Competition ramps up as firms gain new efficiencies with economies of scale resulting from M&A.
Finding ways to scale your own business is one of the best ways to keep up with tougher competition. There is another, however: technology. Partly due to the industry consolidation, more firms are seeking platform solutions that level the playing field. Modern sales platforms power up your producers. These tools create new efficiencies, streamline sales and reduce costs.
Some of the industry’s top insurance platforms, for example, provide end-to-end functionality. This replaces the need for point solutions. The best of these solutions increases your share of customer. They make it easy to quote and submit business for multiple product lines and carriers. It all happens inside a single workflow.
And, they reduce or eliminate not-in-good-order (NIGO) applications. This saves you time and money. Which are essential factors in today’s increasingly competitive marketplace.
2. Explosion of the Fee-for-Service Model
Popularity of the fee-for-service model has compelled some to move away from investment management fees. Or at least include fee-for-service options. Many modern clients—especially younger individuals and families—are seeking advice-driven relationships. They want help managing their finances and understanding the best investment strategies for their goals. This may include diverse investment strategies that involve life insurance and annuities. You can differentiate yourself by giving clients the financial guidance they want.
This means you must be able to offer products and insight for a diversity of needs. Sticking to traditional wealth management products will not be enough. Your firm can empower you to sell life insurance and annuities with modern insurance platforms.
The best platforms do not disrupt your workflow. Some of these solutions are SSO-ready. This functionality makes it easy to pivot mid-meeting and provide the client a quote on the spot. The most sophisticated sales platforms have APIs available. This allows you to bring the illustration and e-application experience into the solution advisors use every day.
It is one thing to simply offer all the products a client might need. You can set yourself apart by making this diverse sales process fast and easy with modern technology.
3. Increase in Client Volume
This comes with the territory in a switch to fee-for-service models. You may be earning less revenue per client but increasing the number of clients you serve.
And yet…the number of hours in a day does not go up in the process. This is where you can turn to technology for help. The right solutions can improve efficiency. When they’re more efficient, advisors spend less time on administration and more time serving clients.
Bill Winterberg of AdvicePay estimates advisors have the capacity to work with 10-25% more clients with the right technology. A good insurance sales platform, for example, supports multi-product line, multi-carrier quoting. This saves you time by including all needed quotes inside a single environment.
Technology can also eliminate time-consuming NIGO applications. The industry average NIGO rates are around 60%. The industry’s top platform slashes this to between 4% and 10%. That frees you up to spend more time selling and serving clients.
4. Millennials Shaking Things Up
Eighty percent of millennials will look for a new financial advisor after inheriting their parents’ wealth rather than staying with their parents’ wealth managers. You need to be able to do business the way millennials want. If not, you risk other firms or advisors stealing away an entire generation from under your nose.
Millennials embrace technology and want a streamlined sales experience. Most millennials communicate digitally more than they do in person. They are accustomed to doing business online.
Firms can support their advisors with technology that allows them to meet—even exceed—millennial expectations. Platforms that offer a digital sales experience from end to end should be a top priority. Broken or disjointed processes can send younger clients looking elsewhere.
Imagine being delighted with a digital quoting and application experience—only to be forced to print, sign and scan the application documents.
The sales experience needs to be digital from start to finish with no exceptions. That includes e-signature and e-delivery.
Thriving in 2023
Many challenges await wealth management firms and financial advisors in 2023. But, there is also ample opportunity.
Lean into technology that will help you stay ahead of the industry rather than trail behind it. The right solutions can level up your efficiency and help you thrive in 2023 and beyond.