As we approach the new year, savvy financial advisors like you are gearing up to navigate the evolving landscape of the financial industry. In today’s world, staying ahead of the curve is a crucial part of remaining relevant to your clients and sustaining your practice.
From adopting cutting-edge technologies to mastering client communication strategies, the job of a financial advisor is never really done. We've got your guide to ensure you not only stay relevant, but thrive in the dynamic landscape of financial advising.
Let’s delve into the best practices that can propel your practice forward in the coming year.
In 2023, advisors faced volatility, but the market avoided plunging into a full-scale recession despite global uncertainties. Notably, the U.S. economy expanded at a robust rate of 4.9% in gross domestic product (GDP) for the third quarter of 2023. The positive trajectory is due in part to resilient consumer spending.
With rising costs of living, persistent inflation has been a struggle that impacts Americans on a daily basis. On average, costs rose 3.2% in 2023, while wage growth slowed. The Congressional Budget Office expects wages to grow at the meager rate of 1.8% over the next decade. Additionally, unemployment is expected to rise as high as 5.1% by the end of 2023.
Over the past year, we’ve watched the supply chain get stronger with fewer hiccups. Additionally, the housing market has started to stabilize while commercial real estate markets have dropped.
As the year comes to a close, it’s time to consider how to best adjust for 2024 and beyond.
As we look ahead, many believe the U.S. economy is poised for a soft landing with a gradual slowdown in growth instead of the jarring impact characteristic of recessions. This outlook is fueled by a combination of factors, including cautious Federal Reserve policies, continued consumer spending, and ongoing efforts to manage inflationary pressures.
Here are a few notable factors shaping the financial landscape for 2024.
One interesting change in the challenging economic landscape is the move away from cash. Many investors and clients are moving towards digital-first transactions. This can lead to challenges in cash flow as investors may stray away from best practices surrounding cash and liquidity strategies. As an advisor, it’s important to help your clients remain agile during these uncertain times.
The SEC released 2024 Examination Priorities to help shape how advisors prepare to meet industry rules and regulations. While not an exhaustive list, the guidelines help draw increased attention to problem areas.
Among regulatory expectations, advisors may be specifically examined for things surrounding cryptocurrency, data security, and an obligation to disclose any conflicts of interest. Notably, the New Marketing Rule has changed how advisors can use endorsements and testimonials to promote their business. Regulators have also been on the lookout for misleading ESG-related claims that are designed to appeal to investors with exaggerated claims.
Artificial intelligence (AI) has rocked the world over the past few years and will continue to create significant headwinds as it’s increasingly adopted by a wide range of professionals, institutions, and companies. Expect to see broad AI and machine learning (ML) applications that transform investment strategies and financial planning processes in the years to come.
Technology has already changed many aspects of portfolio construction, helping to personalize client experiences and detect fraud. The technology continues to improve at a very rapid pace. Advisors need to use smart technology to improve their workflows, insights, and capabilities.
Growing concerns over rising costs, unemployment, and stagnant wages have made many Americans concerned about their financial well-being. Only 29% of adults in the U.S. claim to be financially literate and comfortable with topics surrounding saving, investing, budgeting, managing debt, and spending.
The increasing desire to have stronger money-handling skills has made this a trend worth considering for 2024. Pressure has even caused a growing number of states to require financial literacy courses in high school.
As advisors, it's crucial to reevaluate your approach on a regular basis. The start of the new year is the perfect time to consider how you can improve your practice for your clients. Incorporating strategic changes can position you to navigate evolving market dynamics, leverage emerging opportunities, and enhance the value you provide to your clients.
Keeping your clients at the center of your strategy is crucial for long-term success. Personalization and effective communication are two ways to strengthen your client-advisor relationships. Position yourself to address the evolving needs of your clients so you can gain their trust and offer reassurance—even if the market gets rocky.
Savvy advisors integrate cutting-edge technology. The emerging tech is not just a trend, and building a strong tech stack is a necessary strategic move for financial advisors. Embrace solutions that enhance efficiency, increase security, and streamline due diligence. The right tools will help you get ahead—and stand out—in an increasingly dynamic financial advisory landscape.
In today’s ever-changing financial landscape, staying on top of trending investment strategies is not just a wise professional choice; it's a necessity. As a forward-thinking advisor, you should understand concepts surrounding things like ESG investing, cryptocurrencies, economic forecasts, and changing tax laws—and you should be prepared to talk to your clients about them. Being part of a supportive community becomes your competitive edge, providing insights and collaboration opportunities to navigate industry changes effectively.
Embracing professional development opportunities is pivotal because nothing is ever at a standstill. Continuous learning means growing your skills and knowledge so you can position yourself as a leader in the industry. This is your opportunity to learn new things, expand your offering, and sharpen the skills that matter most to you and your clients.
Investing in your marketing efforts is not just a cost, but an investment in the growth and visibility of your advisory practice. Successful advisors understand this. On average, high-performing advisors allocate significantly more resources to strategically promote their businesses, outpacing their peers to establish a robust client acquisition pipeline.
The landscape of retirement is evolving. Today’s clients are interested in more flexible models, such as phased retirement and alternative work arrangements. To meet these changing needs, advisors must proactively adapt their strategies and listen to their clients. Additionally, it’s crucial to build relationships that extend into the next generation to secure and grow assets under management.
Clients want less generic financial advice and an increased focus on robust, personalized, and educational experiences. Providing holistic financial services—including robust financial literacy programs—is one way to empower clients and build enduring relationships. Offer comprehensive education that sets you up as the expert while helping improve the long-term financial success of your clients.
Congratulations. You’ve already taken your first step towards improvement by stopping to assess your current approach and ask some of the tough questions.
But don’t stop there.
Strive for the kind of excellence that allows you to establish a lasting legacy and empower your clients to realize their dreams. By continuously refining your practice goals, you can stay on a solid path toward professional growth and success.
The team at AssetMark is here to help you in any area of your business. If you want support or have questions, we’d love to chat. Contact our team to schedule a brief consultation and learn more about what we can do for you in 2024.