The financial advisory industry is experiencing a significant challenge as its workforce continues to age and retire. Research firm Cerulli has quantified this problem, highlighting that the number of new entrants barely offsets the number of advisors leaving the profession in 2022. Furthermore, it projects that over the next 10 years, approximately 109,000 advisors, representing more than 37% of the workforce, will retire.
To ensure the success of rookie advisors and prevent attrition within the profession, wealth management firms must reevaluate their mentoring programs. Cerulli advises that these firms should provide comprehensive training to new advisors on various financial planning topics and techniques.
Advisor Expectations: Looking Ahead for Stock Performance
The performance of the S&P 500 last year defied the cautious predictions of many forecasters, rallying by 24%, significantly surpassing its average annual gain of approximately 10%. Taking this into account, financial advisors were asked about their expectations for stock performance this year. In this week's "Advisor Big Q," five advisors shared their thoughts. While they don't anticipate a repeat of last year's robust performance, they generally foresee solid gains for stocks. A common theme among their predictions is the expectation that market gains will broaden, with small- and mid-cap stocks catching up to their large-cap counterparts.
Evolving Wealth Management Structure: Morgan Stanley's Recent Changes
In a recent disclosure, Morgan Stanley announced changes to its wealth management structure shortly after Ted Pick assumed the role of CEO. The company has established a new unit called Wealth Management Client Segments. This unit aims to ensure that clients receive tailored advice at every stage of their financial journey. Vince Lumia, responsible for overseeing approximately 15,000 financial advisors at the company, will manage this new unit. Other changes include the appointment of Chad Turner, a long-time E*Trade executive, as the head of wealth management platforms and an expanded role for Lisa Shalett, the chief investment officer of wealth management.
Digital Dedication Pays Off
Financial advisors often overlook the significance of their clients' digital experiences and how they impact their perception of the advisor. According to a study by J.D. Power, only one-third of clients feel that their advisor has effectively communicated the digital capabilities of their firm. In an upcoming publication, J.D. Power's Craig Martin emphasizes that integrating technology into the client-advisor relationship is no longer optional, but essential. Embracing digital tools and platforms is now a must for financial advisors.
Avoid Silencing Clients
In a concerning development, advisors and brokers at J.P. Morgan Securities allegedly coerced clients into signing agreements that prevented them from reporting potential violations to the Securities and Exchange Commission (SEC). The SEC has uncovered these practices and J.P. Morgan Securities has agreed to pay $18 million to settle the allegations. Although the company has not admitted to any wrongdoing, Gurbir Grewal, Director of the SEC's Division of Enforcement, asserts that provisions obstructing individuals from contacting the SEC with evidence of misconduct are unacceptable and unlawful.
Lido Advisors Welcomes New Partner
Lido Advisors, a respected California Registered Investment Advisor (RIA) managing $19.1 billion in client assets, has entered into a partnership with Constellation Wealth Partners to secure additional capital. Karl Heckenberg, an industry veteran, established Constellation Wealth Partners in the previous year. As part of the agreement, Constellation will hold a minority stake in Lido Advisors, joining lead investor Charlesbank Capital Partners. While Lido Advisors presently does not require additional funding, President Ken Stern explains that they are accumulating resources in preparation for their future growth trajectory.
