Financial Advisors Look Forward to a Better Year

Financial advisors, including mortgage market advisors, expect to be in higher demand this year.

The Financial Professional Outlook, a quarterly survey of over 800 U.S. financial advisors, shows nearly 31% predict revenue growth of 10% to 14% in 2011.

Up to 44% said they expect to see at least 15% in revenue growth by yearend.

Conducted by Russell Investments of Seattle, the survey indicates financial advisors are more optimistic about the overall economic and housing recovery.
Most of the survey participants, up to 86%, reported being optimistic about the capital markets, “broadly over the next three years,” compared to 59% in December 2010.

Russell Investments director of practice management Kevin Bishopp argued that part of the reason is that investor panic has “largely subsided” allowing advisors to “shift their focus back to meaningful long-term planning,” instead of triaging client concerns and addressing their anxieties.

So if in December 2010 only 7% of advisors believed their clients shared optimistic views about the future of financial markets, 36% of the participants in the March survey reported clients were optimistic about the future.

While 72% see client acquisition as the main driver of their business growth in 2011, that expectation increases to 88% among those who also expect more significant revenue growth this year.

Generating revenue growth from existing clients is expected by 49% of advisors surveyed.

Bishopp cautions, however, that advisors need to focus efforts internally first, to both drive significant results for clients, and increase client satisfaction, which in turn eventually turns into sources of quality referrals. Referrals are “a direct reflection of the value” the advisor delivers, he said.

Obstacles to reaching financial goals often depend on ability to deal with risk, especially among mortgage-backed securities investors, and even more so investors with exposure to subprime mortgages.

For example, given the low-return environment, clients’ own lack of comfort with risk is the primary impediment according to 51% of respondents.

Advisors must help their clients understand that if they remain risk-adverse for the long haul “they face a different kind of risk, down the road,” he said.