What your peers forecast for the advice industry

Financial advisors see more regulatory changes and technology in their futures, not to mention a shift to fee-based practices — trends that may benefit both individual investors and advisors, says a survey by Vanguard.

“Financial advisors in Canada are dealing with the impact of an industry on the cusp of significant change due to a combination of changing client expectations, regulatory reform and technological advances,” said Atul Tiwari, managing director for Vanguard Investments Canada Inc.

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New regulations and new clients

One in four advisors believe their job has become more difficult over time, mainly due to regulatory issues. A quarter (26%) of advisors are concerned with keeping up with regulatory changes and 20% are challenged by the impact of regulations on investment selections. But the top challenge was new client acquisition (31%) along with managing client expectations and demands (23%).

When asked about the impact of regulatory changes in Canada, including CRM, advisors listed greater client communication, demonstration of value and increased trust as some of the positive benefits. Among the negatives, advisors listed decreased profitability and reduced total compensation as their top worries.

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Looking ahead

Financial advisors were generally optimistic about the future, with 55% expecting their total number of clients to increase over the next two to three years, and 88% believing their total amount of assets managed will increase. In addition, 34% of advisors list the increased use of lower-cost investment vehicles as a key trend.

Advisors see the industry moving from commission-based business models emphasizing investment selection and specific products to a more holistic fee-based approach that incorporates wealth management best practices.

A full 98% of respondents predict a shift toward fee-based practices, with 83% believing it is better for their practice and 76% feeling that fee-based advice is better for their clients.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.