Three significant threats facing advisors
Financial advisors and wealth managers face several key threats from competitors as the industry grows and evolves, placing pressure on their need to differentiate and find their niche.
These include:
1. More competition
RIA firms represent the fastest-growing category in the U.S. wealth management market since 2016, with more than 1,600 advisors joining the RIA channel annually and bringing with them roughly $180 billion in client assets.2 According to McKinsey, many advisors are moving from larger broker-dealers, and more than 700 independent RIA firms are started annually.2
2. Consumer-driven consolidation
More clients will be looking for banking and wealth management under one roof. Nearly half of consumers survey (49%) want to consolidate all their financial relationships in one place—across private banking, wealth, insurance, and investment services—but 78% of those who would like to consolidate have yet to choose a sole provider.1 Even among investors who prefer multiple financial providers, 25% say they would pay more to access a consolidated view of their investment portfolios, pointing to a greater need to deliver an ecosystem of financial services.1
49%
of consumers want to consolidate all their financial relationships in one place1
69%
of U.W. retail bank customers classified as financially unhealthy3
3. Banks expand into financial advice
Banks are looking to take advantage of the consolidation trend by offering personalized financial advice. Inflation, market volatility, and rising interest rates have contributed to increased prices for goods and services, leaving 69% of U.S. retail bank customers classified as financially unhealthy.3 Banks that address this challenge head-on with personalized financial advice are earning high customer satisfaction and building strong customer engagement.
Overall satisfaction with the advice and guidance provided by retail banks rises 37 points year over year to 638 (on a 1,000-point scale).3
The increase is evident across all attributes of satisfaction and across all levels of financial health:
strong advice is delivered frequently
includes high-quality content
is relevant and personalized to the customer
clearly provides a call to action
and conveys concern for customers’ needs.3
3 2023 EY Global Wealth Research Report
13 The Role of Independent RIA Firms in a Growing Financial Planning Profession, CFP Board, March 24, 2022.
3 J.D. Power 2023 U.S. Retail Banking Advice Satisfaction StudySM, June 2023.