Data released recently by Hartford Funds reveal that financial advisors’ top concerns for 2020 include threats of an economic slowdown and difficulty in recruiting and retaining talent.
Last November, Hartford Funds surveyed advisors on the biggest challenges they anticipate in the year ahead for both their practice and their clients’ portfolios. The findings suggest that advisors may also be struggling to build the teams necessary to navigate industry disruptions and explore new areas of opportunity for clients, such as environmental, social and governance (ESG).
Regarding their practices, advisors’ primary concerns for 2020 are the impact of an economic slowdown and sourcing new talent (31% each). Increasing industry competition from both robo-advisors and traditional wealth managers is the second most-cited challenge for their business (22%) this year. This sentiment among advisors underscores the importance of finding and retaining the right talent to maintain an advantage as competition increases and more advisors are leaving the industry.
“With the potential for a correction ahead and a wave of advisors on the cusp of retirement, it’s critical for advisors to identify and nurture talent to help weather potential volatility,” says Julie Genjac, Managing Director, Applied Insights at Hartford Funds. “Both specialized and intrapersonal skills will be at a premium as firms must find new ways to provide value to clients.”
Developing expertise in emerging investment trends is one area advisors may want to double down on. For example, despite sustainable investing being a point of focus for the industry, more than half of advisors (54%) do not implement ESG products or investing strategies in their clients’ portfolios. What’s more, 26% of advisors have little to no confidence that ESG investments can produce strong returns, and 19% are unsure, signifying the opportunity for advisors to learn more about these strategies and the available options for clients.
When considering their client portfolios, advisors are primarily concerned about the impact of geopolitics on the market going into 2020. More than a third (34%) believe geopolitical tensions, such as the ongoing foreign trade discussions, will create the biggest investing challenges.
This concern is followed by a potential bear market (23%) and the 2020 Presidential election cycle (20%). Despite their fears of a softening market, less than 10% of advisors are concerned about a slowing pipeline of clients in the year ahead.
The survey of 109 financial advisors was executed in-person at the Schwab IMPACT conference in November 2019.