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CFA Institute Calls on Wealth Managers to Meet Needs of Future Investors

New research indicates a gap between client desires, adviser services

Nashville, United States 07 Mar 2017

CFA Institute, the global association of investment professionals, today called for a transformation of the private wealth management profession to better address changing client needs. John Bowman, Managing Director of the Americas for CFA Institute, delivered a speech today at the organization’s annual Wealth Management conference in Nashville, urging advisers to be open to adapting new services and a more holistic approach to redefine their value proposition and meet the needs of future investors. 

In his speech, Bowman also announced The Value of Premium Wealth Management, research conducted by CFA Institute and Scorpio Partnership, that found while advisers and their clients define value in different ways, there are specific ways in which advisers can help bridge the gap, including embracing communication, transforming and broadening services, and preparing for the needs of millennials.

“As a wealth management professional, the one characteristic that should define us is our motivation to deliver the most value to our clients,” said Bowman. “How investors are defining that value is rapidly changing today. The challenge for advisers in this environment is to communicate the value of our expertise and technical knowledge to clients while also catering to clients’ specific, real-world needs.”

The study offers the perspective of both wealth professionals and wealthy individuals to help navigate the changes ahead, and to ensure the future hallmarks of value in the client-adviser relationship are clearly defined. Key findings include:

  • Communication, integrity and financial acumen win over investors. These are the key attributes that financial advisers and wealthy individuals (mass affluent and high-net-worth) agree are requisites for a successful client-adviser relationship. If done effectively, the right balance of emotional intelligence and technical expertise will distinguish the future adviser.
  • Twenty-five percent of wealthy individuals are not using advisers. Of the 4,000 representative sample in the study, 25 percent of wealthy individuals are not currently using an adviser due to high costs and they do not believe that advisers act in investors’ best interests. Advisers must better define and defend their value proposition as wealth managers to avoid disintermediation.
  • Holistic wealth managers take the lead. Clients remain interested in broader wealth needs that go beyond a higher investment performance scorecard. Investors indicated non-investment topics like family enterprise management, philanthropic strategy and specialized investment topics, such as hedge funds, real estate and sustainable investing, are required in an effective wealth adviser.
  • Investors are asking for proactive investment advice and risk management. Advisers must start to think in terms of client experience, rather than just performance. Clients value advisers who can access the whole landscape and determine the spectrum of opportunities and threats that could influence their wealth creation.
  • Prepare for the march of millennials. Yes, technology matters. Seventy percent of millennials believe the core value of a wealth manager is the strength and breadth of their digital offerings, and 89 percent think integration of robo-advisers is important. Convergence of digital platforms and sound advice will define the future successful adviser.

“The future adviser is a champion of client value. We must be open to change, and have the courage to pivot and innovate in order to enhance client relationships,” said Bowman. “Change is inevitable. Rather than fighting trends, let’s work together to embrace them and ensure we’re always striving to achieve the desires of our investing public.”

About the Research

The Value of Premium Wealth Management, designed by CFA Institute and Scorpio Partnership, was undertaken from July to December 2016. Participants were 892 CFA charterholders, 478 independently sourced wealth advisers without the CFA designation, and 4,000 mass affluent and high-net-worth individuals living in Canada and the United States.

CFA Institute

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has over 145,000 members in 163 countries and territories, including 140,000 CFA charterholders, and 148 member societies. For more information, visit www.cfainstitute.org.

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