Firms are starting to dig their heels in and ready their disaster plans as financial advisors and wealth management professionals begin to feel the pain of revenue drops.
According to a recent survey from Arizent, about three-out-of-four wealth managers have seen their revenue dip. It’s a problem made all the more difficult due to the industry’s pivot to a fee-based AUM model. While that certainly benefited companies over the last decade, the model is proving to lack steadiness as the world is faced with the coronavirus crisis that has caused an economic crisis and a major recession.
On Monday, Raymond James announced that AUM for its Private Client Group had fallen to $813.9 billion for February, a loss of $40.1 billion compared to January that represents a 5 percent decline.
According to the Ariznet survey, 84 percent of wealth managers say the pandemic has had a negative affect on their business--not much of a surprise considering the dramatic tumble in the markets.
Technology is beginning to play a larger role in the lives of many financial advisors forcing many to innovate or face the repercussions. Video conferencing is replacing face-to-face and many companies who had not previously invested in technology that helped remote work are being forced to play catch up. As many as three quarters of those polled by Arizent have said their firms are investing in more tech.
Even the largest wealth management firms such as Edward Jones, Wells Fargo, Fidelity, and Morgan Stanley have all urged their staff who can work from home to do so. Goldman Sachs has also encouraged its employees to work from home or from its backup locations.
Charles Schwab, meanwhile, said it’s rushing to get more employees working from home, but has conceded its systems weren’t built to withstand the stresses on the business that the coronavirus outbreak has caused.
Views on the future of the economy seem to be split at the moment. Many financial advisors are seeing this as a positive opportunity, while others hold a more pessimistic view.
