The Big Reset

Despite a double-digit correction in stocks and bonds and near double-digit inflation in the first half of 2022, financial professionals anticipate a 5% median growth in AUM for the next year, and an annualized median growth rate of 10% over the next three years. Those looking to achieve these goals will have their work cut out for them.

To grow, financial professionals have to adapt. For the short term, they’ll need to reset investment strategy for turbulent markets and emotional clients. Over the long term, they’ll need to re-evaluate their market assumptions and determine how much the world has really changed. And then adapt their portfolio and business strategy for a new environment.

The 2022 Natixis Global Survey of Financial Professionals examines what these and other challenges hold for business growth.

• You need more than markets to grow a business
  Markets spurred AUM growth for professionals over recent years, but with a downturn, financial professionals need effective strategies for winning new clients and new assets if they’re going to grow.
• Investment assumptions need to change with the fundamentals
  Markets in 2022 are giving advisors reason to question long-held investment assumptions and determine what, if any, long-term strategy shifts are needed for long-term success.
• The hardest thing to manage may be client expectations
  Financial professionals see investor expectations for risk and return challenged by volatile markets. Their advice: Investors should control what they can. Their Emotions.
• Business models will need to adapt to emerging client needs
  With client demand for financial planning on the rise, advisors are making the transition to a more holistic business model by expanding services on the planning side and implementing model portfolios on the investment side.

“This market has gone straight up for 12-plus years. We've had low volatility and markets... It’s not reasonable to expect that to continue. So, our job is to keep the client grounded and focused on things that they can control, which is their expectations.”

– US wirehouse advisor

“We truly do comprehensive planning. It’s not just investments in the silo, we're not asset managers. We help clients with everything related to their wealth… 401(k) at work, deferred comp, long-term care insurance, life insurance.”

– US wirehouse advisor

“[We] are increasing the level of digitization within our business. Not only to simplify a lot of the investment process, but for the new generation of clients.”

– IFA in France

 

 

 

When it comes down to it, no matter where they are or where they look for new business, financial professionals will have their work cut out for them. They’ll have to evaluate how world events could impact their clients. They’ll have to navigate a more volatile market environment. They’ll have to moderate client expectations and anticipate their reaction. They’ll also need to think about how to adapt their business to changing client needs.

There are many challenges and much to consider, but financial professionals are optimistic despite their new circumstances. And from what they tell us, they’re ready to take it on.