Natixis Investment Managers 2024 Financial Professionals' survey covers 2,700 global financial professionals in 20 countries around the world examining their investment outlook. It provides an insight into advisors' growth strategies, their challenges, and how they are adapting their businesses to market fluctuations. 

With $84 trillion set to pass from one generation to the next over the next 20 years, 46 per cent of financial advisors globally say wealth transfer presents an existential threat to their business, according to Natixis Investment Managers survey. 

Despite the pressure, advisors remain optimistic about their future prospects. Results from the 2024 survey show that they anticipate an average of 11.5 per cent growth on a one-year basis and expect annualized growth of 12.4 per cent over the next three years.

To get there, advisors say they will need to add an average of 34 new clients to the books each year for the next three years, including a high of 53 clients for advisors in France and a low of 16 for those in the US. The survey population includes a wide range of business models from 20 countries, but advisors are clear on which factors will determine their success in the future.

The race to thrive amid the Great Wealth Transfer
Of all the challenges facing advisors in growing their business, keeping current assets on the book is the most critical. Retaining assets relies on strong personal relationships not only with clients but also with their families. But when a client dies and leaves their holdings to a spouse or children, the relationship has to reset, and that puts assets under management at risk, the survey reveals.

Multiply that risk by the $84 trillion that will be passed down in the next 20 years, and it’s no surprise that advisors see dire consequences. In fact, 46 per cent of advisors worldwide say the Great Wealth Transfer represents an existential threat to their business. The future looks challenging, and 43 per cent are increasingly worried that they will not retain assets from clients’ spouses or next-generation heirs.

Despite these very real concerns, advisors have had some success in retaining assets. Overall, they report retaining client relationships 72 per cent of the time when the spouse inherits. But when a client’s children inherit, asset retention is a 50/50 proposition as advisors say they’re successful only half of the time. Nothing is guaranteed, as one-third of advisors report that they’ve lost significant assets through generational attrition.

As such, financial advisors are making retention and prospecting a priority in anticipation of the Great Wealth Transfer. On acquiring assets, global advisors realise that they need to prospect for new clients but currently dedicate only 9 per cent of their time to it, the survey shows.

Navigating risk
In an environment marked by the first interest rate cuts in four years, market highs, and slowing growth, financial advisors have also had the added challenge of navigating a year of contentious elections globally.

Given the speed and frequency at which macro and market factors have changed in recent years, it could be easy to look at the US presidential election as yet another reason for concern about investments. But the November election is just one more in a long line of national elections carried out in 2024, and advisors see greater risks in the policies that arise after the election than the election itself, the survey shows. Seventy-two per cent of those surveyed globally believe that the underlying fundamentals are more important than election results. Looking specifically at the US election, 54 per cent said that the results have already been priced into the market – however, given events in the US during July, it’s not surprising that only 39 per cent of US advisors agree.

The results of races down the ballot could matter more as 59 per cent believe split control of Congress between Democrats and Republicans will be good for the markets – a sentiment shared with 72 per cent of advisors in the US. Ultimately, 59 per cent of advisors believe the election results are less important than US Federal Reserve policy.

Looking at a range of macroeconomic and geopolitical risk on the horizon, public debt, not just in the US but around the world, ranks as the highest risk concern for advisors at 64 per cent.

Demand for private assets
Advisors are also feeling the pressure of having to deliver on the growing demand for private assets, with three in 10 (33 per cent) seeing it as one of the key growth areas for their business. Yet 73 per cent say it is still difficult to build a portfolio of private assets at scale, the survey reveals.

Challenges in upping fixed income in client portfolios
Alongside the need for greater education on private assets, one of the key challenges facing investors in today’s market is their lack of understanding about bonds, interest rates, and fixed income investing.

Of the 2,700 advisors surveyed, 89 per cent said they have found it difficult to increase fixed income allocations in client portfolios. At the top of the list is the uncertainty around interest policy. However, this sentiment may be changing, as target-level inflation has resulted in rate cuts, and the assumption is that there are more to follow.

The cuts may also address the number-two challenge facing advisors: With rates at 15-year highs, advisors say it’s been hard to show clients the benefits relative to cash (43 per cent). Another 39 per cent say it’s also been hard to show clients the benefits of upping fixed income allocations in general. Making it more demanding, according to 39 per cent of advisors, is their clients’ knowledge, or lack thereof, of fixed income, the survey reveals.

In addition to the knowledge gap, 37 per cent of advisors say one key challenge is that clients say they prefer other products such as money markets and certificates of deposit over bonds, while 36 per cent find that with returns on cash at a 15-year high, clients do not have the risk appetite.

Natixis Investment Managers surveyed 2,700 global financial professionals in 20 countries. Data was gathered from June to August 2024 by the research firm CoreData with additional analysis conducted by the Natixis Centre for Investor Insights.