|
It’s no secret that 2009 was a rebound year for both the market and the average advisor. After suffering from high client attrition, AUM decline and revenue decreases in 2008, advisors took the opportunity to fortify their practices in 2009. As we begin the new year and new decade, Rydex|SGI AdvisorBenchmarking is taking stock of the main challenges advisors face in order to help you be better equipped for a stronger 2010. To that end, in December 2009, we conducted a survey of 356 advisors to determine advisor expectations and top goals for 2010. Concentrating on these resolutions for 2010 will help you continue to strengthen your practice and get back on the road to growth.
1. Find Sources of Growth.
In light of this past year’s economic events, the main goal for many advisors is to reach their pre-crisis asset levels and resume robust growth. The majority of advisors (70%) indicate that asset growth and profitability are their top priorities in 2010. And advisors are on the right track–72% said their assets increased in 2009 and 70% said their number of clients increased. Of those who reported growth, most attribute that increase to assets from new clients (88%), new assets from existing clients (72%) and market performance (88%). Going forward, investment advisors will need to focus on profitability, acquiring and retaining clients.
2. Reexamine Expenditures.
More than half of advisors (55%) anticipate that we’ll be in a medium-return environment for the next year. They expect to achieve a 6%-10% average rate of return on client portfolios during 2010. In this environment, the majority of advisors (72%) are forecasting growth for their practices, while 27% will be in “maintenance mode” and just 1% will be downsizing their practices.
In order to grow their practices, one of the biggest challenges advisors will have is taking control of expenses to move toward pre-2008 levels. Advisors are cutting non-revenue-generating expenses, including bonuses (41%), salaries (21%) and travel expenses (28%). However, to help drive revenue and offer a better client experience, 40% of advisors expect to invest additional dollars in technology—specifically, buying CRM, portfolio management and reporting software. To increase revenue, garner new clients and build their asset base, 42% of advisors expect to increase marketing spending. Advisors are most interested in client communication systems; performance, reporting and marketing tools; client needs analysis software; and client education and presentation material software. Investing in the right software system and marketing efforts can significantly improve and increase advisors’ business.
3. Have a Plan.
In order to give your team a good start for the new year, make sure to have your business plan and priorities in place. Review your 2009 business plan and determine what was successful—and what wasn't. This introspection will set the foundation for your future plans. A solid business plan will include your goals for the year (number of new clients, profitability rate, AUM goals, client satisfaction rates) and be measurable so you can assess the effectiveness throughout the year and adjust accordingly. For example, if one goal is to have a retention rate of 99% for current clients, you’ll want to assess how you’re doing throughout the year and create programs to foster strong loyalty to you and your firm. It sounds simplistic, but most advisors underestimate the importance of business planning, with only 18% of firms placing it on their top priorities list—far below the favored priorities of fostering business growth (70%), increasing client satisfaction (45%) and increasing productivity (32%).
Top Priorities in 2010
By determining your sources of growth, re-examining your expenditures and assessing your results against your business plan, you’ll be positioning your firm for growth in 2010 and beyond.
We wish you a successful and prosperous new year.
|
