Wealth Advisors Struggle To Scale Up Business – Study

Editorial Staff February 15, 2024

Wealth Advisors Struggle To Scale Up Business – Study

The study highlights how devoting sufficient time to clients is a challenge for many advisory firms.

According to a survey of 100 financial advisors in the US, most of them (54 per cent) find it challenging to spend as much time as they would like with each client, while 68 per cent said that scaling their practice is difficult.

The findings, carried out by tech firm Totumai and financial industry researcher 8 Acre Perspective, underscore why the metric of advisor/client ratios remains an important yardstick for wealth managers. It also sheds light on the challenge firms face in hiring managers to handle growth.

The survey, entitled AI to the Rescue?, found that advisors are shifting their focus away from investment management to client-facing activities.

When asked where they would prefer to spend their time, 25 per cent said more time on investment management, while 66 per cent said more time on client-facing activities and 45 per cent want to spend more time on prospecting and marketing.

The report said financial advisors struggle with the constraints on their time. While almost all advisors (96 per cent) believe personalization is important, just 10 per cent say they have personalized interactions with all of their clients, and 29 per cent report only some or no personalization at all.

The findings chime with comments made by industry figures to Family Wealth Report that the mass-affluent sector, for example, can be a tough market to serve well because of the difficulties of achieving mass-customization. On the upside, the prize of getting this segment right is a large one.

“Meeting consumer expectations for greater personalization can be challenging, but also represents an opportunity for the financial services industry to come to parity with other parts of consumers' lives,” Jim Neuwirth, president of 8 Acre, said. “Take the streaming services – they curate our experience and learn more about us as we select what we want. This is the personalized experience consumers are used to. How can the advisor market keep pace with these expectations?”

AI to the rescue?
To date, AI for financial advisors is more theory than practice: Just 12 per cent of advisors use AI today, but 48 per cent said they planned to use it. Surprisingly, the report’s authors said that 40 per cent said they had no plans to use it.

Among those using or planning to use AI, the most anticipated use cases are client communications (65 per cent) and prospecting/marketing (45 per cent).

What’s getting in the way of adoption? According to the survey, it’s more about the industry and the advisor’s current level of understanding, and little about clients.

The top two barriers to using AI are: Compliance (58 per cent) and their lack of familiarity with AI (49 per cent).

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