The overwhelming majority (94 per cent) of 942 independent investment advisors with assets held by also shows continued brisk merger and acquisition activity in a sector contending with regulatory and other costs that encourage economies of scale.

Asked what causes the independent advisor business model to grow, 60 per cent of respondents said preference for independent advice versus other models is the reason; 22 per cent said the existence of robust systems – platforms and technology – that make independence easier is a factor; 10 per cent of respondents said that the existence of affluent investors drives growth. The question highlights debate about what constitutes independent advice. 

On the flipside, 25 per cent of respondents said new forms of competition are a barrier to growth; 22 per cent said the cost of doing business is a hurdle and 20 per cent said the ability to stand apart from competitors is a growth challenge.

The great majority of advisors (90 per cent) expect growth to be organic, leaving 10 per cent expecting acquisitions and mergers to be a factor at play.

Technology
In this Information Age, advisors were unsurprisingly asked about technology. Some 36 per cent said they expect to make technology changes in 2020; 32 per cent said they expect to adjust operations and workflow; and 24 per cent said they expect to change how they acquire clients. The balance of 21 per cent expect not to make changes next year.

Asked why new technology was not being put in place, 42 per cent said “client resistance”, followed by 29 per cent of advisors saying that the cost versus time and money saved was a drag factor. Some 72 per cent said faster service was a benefit of new technology, and 58 per cent said it cut errors, and 51 per cent said it freed advisors to concentrate on more complex tasks.

Another finding – which is a concern for larger organisations – is that staff in large firms are more likely to resist new technology than staff in smaller ones, a finding that fits with the idea that modestly-sized companies can be more nimble. Some 18 per cent of advisors from large firms ($500 million AuM-plus) had a tech resistance issue, while the response from smaller firms ($500 million or less) was just 8 per cent.

Different needs
Perhaps confirming some stock impressions of how Millennials, Gen-X and Baby Boomers view the world, the poll found that 74 per cent of advisors said it was important to discuss socially responsible investment (SRI) and environmental, social and governance (ESG) issues with Millennial clients; 61 per cent said it was important to discuss these issues with Gen-X clients, and only 40 per cent said this was the case for Boomers.

Among other factors, 45 per cent of respondents said they are helping clients to deal with cybercrime than in the past; this is the case with 59 per cent of advisors at large firms and 39 per cent at smaller ones. Fewer than half (46 per cent) of respondents said they have resources to handle these concerns, suggesting that the sector must raise its game.