A year of volatility has led to clients paying closer attention to their portfolios than they have in the last decade. The 08-09 financial crisis led high-net-worth clients to change financial advisors, and new scrutiny in 2021 could lead to similar circumstances. That means financial advisors need to be paying attention to what their clients are looking for, or else they might find themselves losing clients.
In 2021, simplistic portfolio solutions just won’t do. Clients in the new year will expect more from their advisors than just the usual passive investment vehicles such as mutual funds and ETFs. Simply, clients expect and want more from their advisor than prebuilt funds, which limit their ability to customize their portfolios. From wanting into ESG funds and out of oil companies to more complex desires, investors in today’s market simply want more customizable options and are looking for that form their advisors.
Furthermore, advisors are going to have to continue to adapt to the new, post-COVID world. That means being ready for rapid shifts in the market. We’ve all seen dramatics rises and falls of various stocks throughout the pandemic, and that is likely to continue as we make our way through 2021.
We’re pretty close to a zero interest rate environment, which means that investments should be tilting harder towards equities than bonds. That’s gonna have a real impact on clients’ risk tolerances and is something financial advisors are going to have to measure closely in their clients throughout 2021.
In short, 2021 is going to be a hard working year for advisors. Advisors who have relied on passive investments are going to have to get more active if they want to keep clients happy. And clients are going to be paying better attention than they have in many years. 2021 is a year to step up, and advisors who do may very well be rewarded with years of future loyalty.
