Top five challenges facing financial advisers around the world
By International Adviser, 14 Oct 16
Financial advisers name the challenges facing the future of their businesses, from poor market performance and a challenging regulatory environment, according to a survey by Natixis Global Asset Management, which questioned 2,550 advisers across 15 countries.
With advisers increasingly having to focus on the quality of experience they deliver, according to Natixis, the largest barrier to this is managing client expectations on investment returns which differ wildly from actual returns.
On average individuals in the 2016 investor survey say they are expecting returns of 9.5% above inflation, in comparison to advisers who expect a reasonable return of 5.3% over inflation.
Given low bond yields and inconsistent equity returns, advisors worry that clients have unrealistic return expectations.
Bridging this divide is an important part of effective client management, says Natixis, with 86% of advisers disclosing that their success is linked directly to their ability to manage client return expectations.
A world of differences
According to the survey, making emotional decisions is the number-one investor mistake.
Next, they point to unrealistic return expectations, focusing too much on short-term noise, followed by failing to have a plan, and not understanding their own risk tolerance.
Expectations vary in different parts of the world
The largest gap in investor expectations is Italy where client hope for a return of 9.9% but can expect a return, based on adviser expectations, of just 3.4% – a 191% gap between expectations and returns.
In the UK, clients want a return if 8.3% above inflation but can actually expect a return of just 3.8%, say advisers.
In the UAE, clients expect a return of 10.8% compared to the adviser’s more muted 6.5%.
In Hong Kong, the figure is 9.3% to the adviser’s expected returns 5.5%.
In Singapore, the figure is more realistic, with clients wanting a 9.3% to the adviser’s 5.5% returns.
In Columbia, clients are looking for a return of 11.5% above inflation despite adviser expectations of 5.3% above inflation.
Tags: Natixis
