Over the past few years, the wealth management industry has experienced rapid changes accelerated by but not exclusive to the COVID-19 pandemic, ushered in by the ongoing Great Wealth Transfer and the digitization of our daily lives.
Looking ahead to 2023 and beyond, we see five distinct but correlated trends in investor behavior emerging:
More people are looking for financial advice.
According to a College for Financial Planning survey, 71% of advisors have increased their client base since the pandemic started, indicating a high confidence level in professional financial guidance. This growth could be due, in part, to the success of investors working with advisors during periods of market volatility. As a result, they’re less likely to panic and are, the survey results communicated, mainly on track to retire on time despite market movement.
It’s worth noting that the wave of new clients seeking financial advice includes a more significant portion of millennials and Generation Z.
Direct brokerage accounts are increasing in popularity.
Along with those seeking professional financial guidance are those interested in exploring trading on their own. According to the Animal Spirits podcast, 25 million new direct brokerage accounts have been opened since 2020 thanks to trading apps like Robinhood.
Direct brokerage accounts are appealing because of their lower fees and commissions, as well as the ability to invest without going through a third party, an expectation largely created through the convenience and ongoing proliferation of Amazon, Netflix, DoorDash and Uber: Applications that allow us to access exactly what we want at the click of a button. Leveraging direct brokerage accounts also affords investors complete control over their investments, including what and when to buy and sell.