The COVID- 19 pandemic made for a tumultuous 2020. From Wall Street to Main Street, broker-dealers, RIAs and financial advisorsdeserve a lot of credit for responding sonimbly to the crisis.
Advisors and their firms showed they’reable to both service clients and grow theirbusinesses during this challenging time.
As we turn the page on 2020 andbegin to focus on 2021, here are somepredictions on what the industry is likely to see next year.
1. Recruiting deals will stay strong.
Firms are going into next year with aggressive hiring goals and souped-up recruiting packages. This is the case across allchannels — the wirehouses, high end boutiques and independent firms.
Morgan Stanley and Wells Fargo boosted their deals this year, and independent broker-dealer/RIA CommonwealthFinancial is set to introduce an enhancedpackage to attract wirehouse advisors in2021. Firms of different stripes and sizesare emerging from the pandemic, andthey are determined to grow.
2. The movement to independence
just got more legs.
For many advisors, the pandemic wasa dress rehearsal for independence, asadvisors found themselves workingfrom home.
This prompted many of them to askthemselves if they really needed a fancybranch office — and all the rules andpolicies of their current firm. For many,independence suddenly didn’t seem likesuch a stretch after all.
3. Advisors will continue to work
(at least) part time from home.
Many advisors discovered that they rel-
ished the informality and increased fam-
ily time that comes with working from
home. With no work commute, there can
be more time in the day (or at least greater
flexibility) for non-work activities as well.
While some advisors did miss dailyinteraction with team members and colleagues, many will insist on workingpart time at home going forward.
4. Virtual home office visits are
here to stay.
Advisors learned that they could get atremendous amount of useful information from product specialists and seniormanagement at prospective firms viaZoom calls. Plus, hiring firms found thatthey could run many more potential advisors through their recruiting process.
This proved to be an efficient use oftime for advisors and firms alike. In thefuture, getting on a plane and flying outto visit a prospective firm’s corporateheadquarters will become just anotheroption for advisor due diligence.
5. Advisor dealmaking will remain
Many aging advisors will put their practices out to bid. With markets hittingnew highs, valuations are strong — so it’sa good time to sell.
Also, many older advisors want toexit the business before renewed market volatility hammers the value of theirpractices or stresses them out.
6. The RIA model will continue to
Both wirehouse and independentbroker-dealer advisors will continue togravitate to the registered investmentadvisor space. It’s fiduciary modeland investment freedom are attractiveto many.
Despite the incremental growth offlat and hourly fees, the “good ole”fees tied to assets under managementwill remain the primary way that RIAscharge. It’s a set-it-and-forget-it pricingmodel that obviates the need for yearlyarm wrestling with clients.
While there’ll be lots of scaling up viaRIA mergers, predictions that a handfulof mega-firms will dominate the business will come to naught.
Yes, these giants will have the budgetfor a lot of cool technology and marketing programs, but there always will beroom for smaller players who can forgerelationships and provide value to investors — and to advisors who join them.
7. Diversity and inclusion matter.
Firms will continue to scour the marketplace for diverse advisor candidates. They will accelerate theirefforts to encourage members ofminority communities to join advisortraining programs.
This will involve recruiting at historically minority colleges and diversestudent organizations at other schools.
By Mark Elzweig
7 Predictions for Advisors and Firms in 2021
From changes in recruiting deals to more M&A, here’s what lies ahead for the year.