Financial Professionals Must Adapt to New Market and Political Reality: Report

Stock market investment chart (Photo: denisismagilov/Adobe Stock)

The early part of 2022 has been a difficult trip for investors and financial professionals. Disruptions in the supply chain, inflation, rising interest rates, the Ukrainian invasion and a volatile stock market are testing the growth opportunities of financial professionals.

The Natixis Global Survey of Financial Professionals, The Big Reset, which surveyed 2,700 professionals in 16 countries looked at what is above and other challenges for business growth. The four main takeaways include:

  • You need more than just markets to grow a business.
  • Investment assumptions need to change fundamentally.
  • The hardest thing to manage may be the client’s expectations.
  • Business models need to adapt to the evolving needs of the client.

Investors have seen bull markets as high as 20% –30% over the past two years. Financial professionals have also seen their business book grow accordingly. Outsized market performance has made it easier for professionals to increase their assets under management and eased the pressure to seek (and win) new clients and new assets.

However, by 2022, the job has become more difficult, the report says. Surveyed professionals say the median number of clients they will need to add annually over the next three years to achieve their growth is 20.

Unfortunately, winning new clients is not the easiest way to grow. Nearly half of those surveyed (49%) see it as the most challenging of all growth drivers. Recognizing that it takes time to pursue new clients, some may expect to enhance operational efficiency in their practice. But 43% say investing in technology, training, and other initiatives is also a challenge.

Success comes by demonstrating value beyond asset allocation (49%), building next-generation relationships (45%), client retention (40%), and access to technology (38% ), streamlining the client base (25%), sequential planning (24%), and addressing the need for crypto currency (16%), according to the report.

Despite the many challenges, financial professionals are optimistic, seeing better days in the second half of the year. On average, they plan a market rebound in most major indices from near-bear market territory to post gains by the end of December, including 5.8% for the S&P 500 and 6.4% for the MSCI World index. . Financial professionals are more likely to say that equities are attractive (39%) than unattractive (31%). Another 30% say the environment has not changed their views on the appeal of equities in any way.

With both stocks and bonds experiencing corrections, investors ’safety instincts are beginning and nearly three-quarters of professionals (73%) hear clients asking,“ Do I need to leave the market? now?” More counselors in North America (82%) get the same question from clients.

Over the past two years, pandemic protocols have forced businesses to operate remotely. However, financial professionals have discovered that tried and true strategies have generated their business growth. Seven in 10 (72%) say client referrals have helped with needle transfer, including 92% in Canada, 90% in Australia and 86% in the US.

Referrals from accountants, lawyers and other professionals (48%) also helped drive growth. Personal events and experiences such as client seminars and dinners have proven effective for one-third of professionals (34%). About one in five say social media has been effective in their search efforts. Professionals in Singapore (45%), Colombia (43%) and Hong Kong (41%) had the greatest social success, while smaller numbers in Switzerland (5%), Germany (9%) and the US ( 9%) found it generated assets.