Four Reasons Why Financial Advice is In Vogue


With a lingering sense of uncertainty from the 2007 financial crisis, some might think the demand for financial advice has lessened.

The reality is, this very uncertainty is causing investors to seek higher-touch service, as well as smarter technology solutions, says Pierre Bossaert, vice President of Product Management, Investment Services, at Fiserv.

“Given the current financial climate, there’s been a movement toward providing more advice-led services,” Bossaert says. “These services are based on understanding a client’s entire story, rather than the more traditional, transaction-oriented relationships. As a result, the advice market will be very much in vogue for the foreseeable future.”

Bossaert says that there are four core issues driving this shift:

1. Changing expectations

Investors increasingly expect their advisors to listen and focus more on concerns and goals. These expectations often involve flexibility, transparency and taking a holistic approach to financial planning.

“Advisors need to establish a high level of trust with clients and demonstrate the value of individualized support,” says Bossaert.

2. Risk aversion

Many individual investors stung hard by the two recent downturns were self-directed. Now, they’re not only looking for strategies and advice, they’re more cautious with how they treat their investments. As a result, they’re seeking dynamic relationships with their financial advisors.

“Clients are more risk-averse, want to take a more active role in their investments, and demand better service and clearer value propositions,” Bossaert says.

3. Regulation demands

To inject trust back into the financial services industry, many regulations have been passed, such as the Dodd-Frank Act and, more recently FINRA Rule 2111, which imposes greater fiduciary responsibility on advisors to know their clients and recommend suitable investments. As a result, financial institutions are re-analyzing their approach to advice. That includes providing more meaningful, goals-based financial guidance.

A demanding regulatory agenda will continue to challenge existing business models,” Bossaert says.

4. Technology innovation

Thanks to advances in platform integration, and in the mobile and online channels, the cost of financial advice can be lower. As a result, quality advice can be delivered to a much broader segment of the population. This segment includes the tech-savvy Generations X and Y—potential future high-net-worth individuals.

“In years past, advisory services were primarily only available to high-net-worth clients,” Bossaert says. “What we’re seeing now is the ability to serve the mass affluent market with tools for goal setting, planning and reporting. Technology makes distribution of advice more efficient.”

Chart Showing the Evolution of the Advisor

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