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Three Top Challenges Facing Independent Financial Advisors In 2012
It All Circles Back To Keeping Up With The Technology
Independent Financial Advisors have a lot on their minds these days.
From business development, broker-dealer restrictions, and simply keeping up with ever-advancing technology in order to survive (and hopefully thrive) in today's marketplace, 2012 is poised to see a much-awaited uptick in the economy after a three-year period of stagnation – not to mention dips.
And that's good news for the Independent Financial Advisor.
“We're excited about what lies ahead in 2012,” said Chris Hastings, CEO of Sapphire Software Services, which developed Panoramix, an increasingly-popular portfolio management dashboard for independent financial advisors. “Economic indicators point to growth, and this makes it essential for advisors to be prepared.”
Thus – and generally speaking – here's a look at three of the top issues facing Independent Financial Advisors in 2012:
1. Attracting Younger Clients
The more Baby Boomers continue to retire, and in some cases even die, the more advisors are concerned with how to reach younger generations.
For starters, unlike their Baby Boom parents, Generation X and Y grew up with computers, and are thus far more likely to be primarily accessible via the Internet. This can create a serious problem for advisors who are much more accustomed to a traditional marketing approach, as opposed to online marketing vehicles such as e-mail and social media.
Another issue is that, much like auto insurance, many young investors are simply opting to use their parents’ financial advisor because they don’t know where else to turn. Others are seeking advice from friends from college who apparently believe passing the series 6 or 7 and 63 along with a shiny new business card from the Acme Insurance Co. dawns them a fully qualified financial advisor.
Advisors are seeking young investors, young investors are seeking advisors, and they can’t find one another.
The problem is, they both have the same dilemma – there is no marketplace for financial advisors. There’s nowhere a prospect can go to shop for an advisor to fit their specific needs, and there’s nowhere an advisor can go to put themselves in front of prospects (that is, of course, unless they can manage to establish an online presence).
So the challenge for advisors?
“Be in tune with technology and what it takes to attract – then manage – you business the way your clients wants it managed,” encouraged Hastings. “It doesn't matter how old you are. You need to think young.”
2. Broker-Dealer Restrictions And Bringing Held-Away Assets Under Management
Many complaints can be from advisors with broker-dealers whose restrictions are limiting their ability to manage and bill on accounts held outside their broker-dealer.
These advisors understand that BDs only get paid on assets held in-house, but many make the point that, if you’re a good producer and will eventually bring the assets in-house anyways, then why wouldn’t the BD not only allow – but encourage and help facilitate – the advisor with managing those assets? If that were the case, advisors could provide more holistic advice so their clients would be happy, they could easily increase their AUM by at least 10-15% so they themselves would be happy, and their broker-dealers would get happy advisors bringing more assets in-house.
But apparently, BD’s are not seeing it that way.
Similarly, many advisors are also running into prospects with great potential as prospective clients, but that have the majority (if not all) their investable assets in qualified plans with their employers. Advisors are looking for ways to sign these prospects as clients, but are unable to do so without the ability to manage their held-way accounts.
There's really no clear cut solution to overcoming this obstacle completely – it simply goes with the territory – but as Hastings notes, “a good technology-based management system will definitely make your life easier.”
3. Data Aggregation And Satisfying Clients Heightened Reporting Demands
Easily the top concern for Independent Financial Advisors is data aggregation and how it can be utilized to help scale and grow their businesses.
And coupled with this is while the wave of technological advancements can bring countless new possibilities, client expectations also rise exponentially.
Clients want more reports – and more frequently.
“'More, more, more,'” Hastings stresses. “Not to mention 'now, now, now'”
And don't forget more accurate.
Rolling out a higher number of reports at a faster pace is in itself a challenge, but doing so while at the same time making fewer errors – and without the proper technology – can be nearly impossible.
Investors are demanding round-the-clock updates on their portfolio performance, which cranks the heat for advisors (and especially independent ones), making a back office seem more like a sweatshop than an advisory firm.
The higher the client demand for reports, the higher the stress level for advisors.
Which is why systems like Panoramix have been so welcomed to the industry.
Features such as data integration and contact management (merging with Microsoft Outlook and Google Calendars, among other popular programs) combine with it being the primary repository for critical client data including asset details, income information, financial goals, and, in general, all aspects of what it takes to “know” your client and offer them advice.
“Systems like this hold the promise of enabling much greater advisor efficiency, better collaboration across the board, and improved client service,” added Hastings. “And these days, that's absolutely essential to be in the game.”
Sapphire Software Services inc., a custom software and business-to-business automation company founded in 2003, developed Panoramix® for financial advisors in 2013 and completes 16 planned releases per year to the product. Sapphire brings business applications to the web, provides consulting services with the best vendors and partnerships, and offers professional development capabilities to automate business processes. Sapphire specializes in business application software development for companies in the financial services sector. Panoramix, its award-winning flagship software tool for portfolio management for financial advisors, focuses on providing multi-custodial performance reporting and client billing, with a wide-ranging additional feature set. Sapphire markets under the name Panoramix Financial. For more information on Panoramix connect with us at www.panoramixfinancial.com.
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