Personal Finance and Advice - US - June 2015
The personal financial advice industry is changing rapidly. Robo-advisers are increasingly popular and the number of financial advisers is shrinking as more retire and fewer are hired to replace them. As a result, competition for advisory clients is increasing, and advisers have to find ways to differentiate themselves from one another and to demonstrate the value-added services they offer.
This report looks at the following areas:
- Learning to live with robo-advisers
- Lots of competition for customers
Millennials offer opportunity, but attracting young clients requires advisers to shift their business model to come up with a solution serving the needs of young clients while providing a high quality client experience.
This report includes information about the personal financial advice industry, including how people utilize advisers, steps they have taken toward getting and using financial advice, and their attitudes toward advisers and financial advice in general. “Personal advice” encompasses any guidance received from any type of adviser, including bank advisers, accountants, and insurance agents, as well as from financial advisers who work at different types of investment and brokerage firms.
The world of personal financial advice has always been challenging. The market for it has traditionally been fairly limited as advisers have historically limited themselves to a relatively affluent customer base, leaving young people and those who have limited assets without help. Add to this the fact that many people believe they can manage their money themselves and that the recent recession caused many people to suffer financial losses, whether they used an adviser or not, and the advice landscape becomes even trickier. Now robo-advisers are increasing in popularity, and Millennials are especially interested; they cost less than a human adviser, they are accessible 24/7 in the way that Millennials expect, and they don’t require a large asset base that most Millennials have not yet accumulated. However, Millennials represent the advice customers of the future, so it is critical that advisers find a way to attract them.
Another challenge for the industry is that it is aging. The average age of an adviser is 52 and more are retiring each year than are being hired to replace them. The end result of this is that fewer advisers are available for those who want them, making it more difficult for potential clients to get the guidance they want and need
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