8 trends that can change wealth management


    Each year seems to go by faster than the last. For many consultants, the farewell to 2021 is bittersweet, because despite the lingering shadow of the pandemic, many have set new sales records and at the same time have found creative ways to serve customers and manage their business lives.

    In part 1 of our 2-part series, A look back at 2021: 7 trends that suggest this is a seller’s market, we examined the trends that shaped the year. This article looks at the foundations laid over the past 12 months and how we expect certain events and activities to mark the New Year for Consultants and their businesses.

    And an overarching topic has already emerged for 2022: the concept of “more”. One thing is certain: everyone wants more.

    • Customers want more from their advisors.
    • Consultants want more from their company.
    • Companies want more from their consultants.

    It is the constant pursuit of “better” that drives change and paves the way for the fastest development the wealth management industry has ever seen.

    While clients seem to be at the top of the food chain when it comes to pressures, in reality it is the advisors who are in charge – because they are pushed by both sides.

    And smart entrepreneurs are in the labs updating their offerings and rapidly developing new models to keep up with ever-growing demand.

    This is great news for consultants, their clients, and the industry at large as it is a cycle of growth that shows no signs of stopping and offers opportunities for all participants. And it is precisely the fuel that will keep the seller’s market burning well into 2022.

    At the same time, we anticipate eight influential trends and outcomes that we expect to develop from:

    1. The advisor movement will remain at or near record levels.

    The consultant movement in 2021 was at a record level, and we expect that trend to continue in 2022 – itorn apart by the ongoing restrictions on wirehouses, but even more so by the trend towards new models that detach so much of what consultants and their clients want. That is, «more» that is within reach, as new models are being born at a breakneck pace and can satisfy pretty much any consultant version of Utopia.

    At the same time, we cannot ignore the ongoing effects of the pandemic as advisors work from home, providing the privacy and time to reflect on their business lives.

    2. Companies will continue to push repurchase agreements and move towards lifelong retention programs.

    Companies want to keep consultants from cradle to grave – and will find ways to motivate them to do so.

    In the past, large companies used retirement programs to motivate people living near retirement to sign up for careers. Surely a great way for these consultants to monetize everything they have worked for when they fully expect to retire from their company at the end of the day. But companies have realized that by offering these programs to people earlier in their careers and asking them to commit themselves for the next 10 or 20 years, they can retain consultants for much longer.

    But if more consultants are involved in these programs, the big firms will have more leeway to drive additional change. While we expect many consultants to be involved, the longer term outcome may be the buyer’s regrets.

    3. Record sales do not affect recruiting deals.

    We are seeing blockbuster earnings reports from the major banks and brokerage firms, and the advisors hope this will increase the recruiting business. But we don’t expect them to necessarily share their wealth.

    What we might see instead are increases in the backend bogies associated with recruitment deals, which makes the headline numbers sexier but harder to hit overall.

    4. Merrill will back off the record – finally.

    While our assumption is purely anecdotal, we believe 2022 will be the year Merrill will be definitively eliminated from the protocol for broker recruitment. The reality is we’re surprised they’re still at it.

    Due to the fact that the company is not recruiting competitive talent and recognizing record levels of turnover, we expected Merrill to exit.

    So the message is this: if you are a Merrill consultant and you believe there is a step in your future, it won’t help you to wait. It’s easier to move with protocol protection than without, but UBS and Morgan Stanley advisors have proven that leaving a non-protocol company is possible provided you have the right advice and guidance.

    5. New disruptive brands will conquer the wealth management arena.

    Equipped with a story that fills a void and resonates with advisors and customers alike, new players will come into play and make waves in the landscape. Rockefeller Capital Management continues to provide a proof of concept for this, showing that a strong value proposition and a sexy brand can generate interest and disrupt the status quo.

    But we think the next big hit will come from highly respected companies, the play alongside wealth management like Blackstone, BlackRock or Lazard. And the enthusiasm for Amazon or Google could get louder as they venture more into the area of ​​wealth management for private customers.

    6. Goldman’s custody service will be a turning point.

    A forecast we made a year ago has come true: Goldman Sachs set the course with the takeover of Folio Financial (a smaller, more boutique custodian bank).

    While the custody field is more competitive among defenders like Schwab, Fidelity, and Pershing, grabbing the attention of wirehouse consultants who see the Goldman brand as a step up and a way to ultra- high net worth clients. For many budding entrepreneurs, this can give them the impetus to start their own business.

    7. We will see more independent asset firms going public.

    In 2018, Focus Financial broke new ground as the first major IPO in the RIA area. CI Financial, the giant Canadian wealth manager who has been on a shopping spree across U.S. wealth management, filed for an IPO in early ’21. Tiedemann, a multi-family office worth $ 20 billion, went public a few months ago through a SPAC deal.

    With demand for initial public offerings soaring, we expect more mature, multi-billion dollar RIA companies to join the fight. Some names to look out for are Hightower Advisors, Mercer Advisors, or even Dynasty Financial Partners.

    8. Interest in recommending crypto to customers will increase the attractiveness of the RIA space.

    It is not surprising that cryptocurrencies are in vogue with many advisors and their clients. For those in the real estate world, however, it will remain a talking point and not an investment to offer to their clients.

    Right now, Fidelity is at the forefront of the crypto boom in wealth management, but we expect other custodians, fintech providers, and even companies like Coinbase to find their way – pretty quickly.

    As crypto grows in popularity and technology continues to evolve, we expect the desire to recommend it to grow too – making it one of the drivers for advisors seeking independence.

    While the pursuit of greater success will fuel growth for consultants and businesses alike, the real winners will be customers, who will benefit from an industry ready to answer every single call.

    And that is exactly what will make 2022 extraordinary.

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