Where do financial advisors stand today?

News | 02/09/2019

In recent years all financial service providers have been facing an unprecedented array of challenges. Shrinking revenues and intense pressure from clients and regulators demand the adoption of new business models. That’s why we are witnessing huge steps toward mobile, AI and other new technologies. There are new players and FinTech firms, which have emerged to challenge traditional financial institutions and advisors. Digital is becoming more and more important to clients, who place the highest value on protection and personal financial management (PFM), followed by mobile payments and the personalized digital experience. These concepts come well above widely publicized FinTech concepts such as peer-to-peer lending and robo-advice.

Članek je na voljo tudi v slovenščini TUKAJ.

Let’s look at some facts from today’s financial advisory industry.

According to McKinsey’s PriceMetrix annual report, one of the ways advisors have maintained revenue growth, was through an increased focus on new client relationships. In 2018, advisors opened 8.1 new client relationships, up from 7.6 in 2017. However, we all know every human has his or her limits, and advisors are no exception. One cannot manage more clients every year. Now imagine, if you had the tools that would enable you to gain and manage more clients every year, without putting in extra hours!? This is something only technology can do.

One more indicator shows us where new revenue growth is: revenues from fee accounts grew by 17% in 2018, according to the previous year, while revenues from transactional accounts declined by 5% year over year. It’s clear, advisors need to focus on fee accounts. And the best way to do that is by leveraging technology to offer added value through subscription models.

Subscription is the new name of the game

Let’s dig deeper into the data of revenue growth. We can see that it was further propelled by the fact that fee assets are more productive than transactional assets. So, clients are more and more willing to pay a fee that will secure them permanent help in managing their finances. And by permanent, they mean available 24/7 through a mobile app.

Fee-based revenue represents a record two-thirds of advisor revenue, and fee-based assets grew from representing 33% of all assets in 2015 to 47% of all advisor assets in 2018. It’s a clear trend. Clients are welcoming fee-based methods, so adding a subscription fee for your advice to their account should be easier than you think.

Another report showed that 40% of financial advisors believe mobile apps, accompanied with digital platforms, will transform wealth management. In contrast, only 27% of advisors reported that ‘robo’ would be poised to transform the space within the next few years.

With the aim to become more effective at work, we start looking for a solution. As we didn't find one on the market, we decide to develop MoneyRebel platform that will give you the possibility to upgrade existing business. Today MoneyRebel is an all-in-one platform that offers a digital advisory experience that will help financial advisors introduce a subscription model and evolve their business also with millennials in mind.

The article was published in the September edition of the FEIFA Magazine: The Trade Press

You can read more about The Future of Financial Advisory Companies in our latest e-book. Get your copy HERE.
Sources: McKinsey’s PriceMetrix annual report; Accenture consulting report: Millennials and Money; CGI survey: Disruption in FinTech

Where do financial advisors stand today?

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