Financial advisers face new pressures in a volatile economy – InsuranceNewsNet


According to some surveys, Americans, in this post-pandemic era of runaway inflation, collapsing markets and international turmoil, say they want and need professional investment advice more than ever. Yet it puts renewed pressure on financial advisors to stay current and develop effective strategies during volatile times. Gone are the days of smooth skating in a high-end market.

A new study from Allianz Life found that 93% of Americans believe setting financial goals and developing a plan to achieve them is important to support their future ambitions. More than 86% cited the benefits of working with a finance professional.

“So many Americans are in a vulnerable position with their finances right now, it’s encouraging to see the high value placed not only on the practice of financial planning, but also on the advice of a financial professional,” Kelly said. LaVigne, Vice President of Consumer Perspectives at Allianz Life. “The pandemic has changed a lot of expectations around finances and creating a retirement strategy, so now is a good time for finance professionals to understand, adapt and meet clients where they are. are found.”

According to the Allianz survey, those who already work with a finance professional feel much better prepared to manage a number of potential risks to their retirement, including:
• Save enough
• Have a retirement income plan
• Dealing with the rising cost of living.

But at the same time, more than half of respondents said they had never worked with a professional financial adviser and about the same number said they had no plans for retirement income.

According to the survey, pre-retirees expect a different level of engagement with their finance professional, both in terms of service and strategy. A higher percentage of pre-retirees expect their finance professional to be tech-savvy, offer interactive tools to understand finances in a variety of scenarios, and be flexible with meeting options, including virtual meetings, to meet their needs. Additionally, more pre-retirees are interested in exploring a non-traditional life path where they can try different things at different times instead of following the traditional school-work-retire path.

Many feel underserved

Many customers feel underserved by their traditional financial institutions, said Joshua Jimenez of MoneyMap, and young investors are turning to fintechs for advice.

“We’re seeing more and more end users want personalized financial advice,” Jimenez said. “The rise of neobanks that target certain demographics and personal financial management apps are helping their general finances, but only to a certain level. More complex issues require a trained professional.

There are signs that the advisor industry has been prompted by the pandemic to develop innovative software that helps advisors stay up-to-date and current.

“These programs allow advisors to track their clients’ investment portfolios, monitor social media for potential risk alerts related to the economy or health issues, analyze the headlines of the news for any emerging trends that may have investment or client account implications, and more.” said Paw Vej, COO at “In addition to these risk management tools, many financial advisers also offer advisory services related to managing finances in difficult times. This may include providing advice on how best to prepare for a global recession or to invest during times of political uncertainty.

Keep up to date “critical”

“It’s critical for financial advisors to stay current and up-to-date in the post-pandemic era of high inflation,” said Oberon Copeland, owner and CEO of, adding, “As we’ve seen over the Over the past year, the pandemic has had a major impact on the economy, and this is expected to continue in the years to come.Inflation is one of the biggest challenges we face during periods of economic uncertainty, and it can have a significant impact on investment portfolios.

“One way for advisers to stay informed is to subscribe to economic news sources and read updates from the Federal Reserve,” Copeland said. “By staying informed, financial advisors can help their clients weather these difficult times and protect their wealth.”

With market volatility and rising inflation, there are things financial advisors can do to stay on top of different products or solutions to meet client needs, said Jason Steeno, president of CoreCap Investments and Advisors in Southfield, Michigan

Among these, he said, are the ability to leverage the internal resources of their registered investment adviser,

“Often times the CIO’s team is looking for products that can help provide a hedge or provide an uncorrelated asset to offset a falling market,” Steeno said. “It could be with managed options strategies, alternative investments or other types of products that might be suitable for clients. This is the first resource any advisor should consult for more product information. »

Steeno also recommended advisors tap into their peer network, a constant refrain from advisors.

Connect with other advisors

“The best source for keeping up to date is to connect with other advisors,” said Matthew D. Grishman, Director, Wealth Advisor at Gebhardt Group Inc. “I see our industry as one gigantic team tasked with a critical mission to help our world have an intentional relationship with money. And the more we collaborate, the better off our customers and society will be.”

Many advisors, he said, hesitate during turbulent times for fear of not knowing what to say to clients other than “Hang on.” This too should pass. We are in this for a long time.

“As a result, advisors often miss out on the incredible once-or-twice-in-a-career opportunities that markets like these present to us to deepen and grow our relationships with our clients,” Grishman said. “It is essential that advisers keep their heads on a pivot, their eyes and ears wide open at times like these.”

Don’t hide under your desk waiting for the storm to pass, advises Grishman.

“Tune in. Stay connected with other advisors,” he said. “They are your key ingredient in helping you get your clients through these very difficult times with their retirement savings. As we all work together to share ideas and improve in our craft, everyone wins.

Robert Johnson, professor of finance at Heider College of Business, Creighton University in Nebraska, and co-author of “Investment Banking for Dummies”, among others, said the turbulent times have been an opportunity for advisers to get back to business. ‘essential.

“The four most dangerous words in the English language when it comes to investing are ‘This Time is Different,'” he said. “I think advisors and investors too often want to complicate things. The acronym KISS (Keep it Simple, Stupid) should guide investment decisions in times of turbulence as well as in times of calm. »

One of the key principles to keep in mind, Johnson said, is that if you can’t value it, don’t invest in it.

“This particularly applies to cryptocurrency markets,” he said. “We have individuals investing in crypto and they have no idea how to value it. They simply buy it in the hope that its price will rise. I saw a recent quote that resonated with me: “A good rule of thumb is that if you don’t understand something well enough to explain it to a 10 year old, you probably shouldn’t invest in it.” “

Being prepared is also dynamically necessary for times like these, advisers say.

“The most important factor is being prepared for a situation before it happens,” said Jon Ekoniak, managing partner at Bordeaux Wealth Advisors in Menlo Park, Calif., which manages more than $4 billion. of assets. “Preparing for a market downturn must take place before the market declines. If you’re in reactionary mode, chances are you’ve missed your opportunity.

As Johnson noted, Ekoniak also believes in going back to basics.

“We don’t need to reinvent the wheel every time we encounter volatility,” he said. “While each situation may have its own set of circumstances, it is important to create and maintain a large toolbox of investment opportunities so that you can take advantage of those that are most appropriate for the market scenario. current.”

Developing a niche is important

Developing a niche is also sometimes important.

“A better strategy is often to become an authority in a particular area, like helping retired athletes or the software industry,” said Levon Galstyan, CPA at Oak View Law Group. “By specializing in a specific area, you can more easily stand out from the competition, take advantage of lower levels of competition, win more customers, and potentially charge more.”

Galstyan also advises being aware of changing demographics.

“In the past, young to middle-aged men who interacted with middle-aged to older men made up the bulk of this industry,” he said. “Today, that is changing rapidly. Today, women control two-thirds of private wealth in the United States, compared to more than half they currently own. In addition, younger generations are participating and building their wealth faster than ever before. Advisors need to ensure their team is as diverse and dynamic to interact with this dynamic set of clients.”

Doug Bailey is a freelance journalist and writer who lives outside of Boston. He can be reached at [email protected]

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