Advisers feeling more pressure to manage risk, communicate

Life is more complicated for advisers these days, who face increased pressure from investors to manage investment risk and communicate more frequently...

…preferably through social media, according to executives who attended a Fidelity Investments-sponsored event in early May.

At the same time, advisers report feeling an increased need to differentiate their firms from the competition, while walking a careful line on compliance issues.

Advisers are “placing a premium on making sure your proposition is clearly differentiated in those markets where you want to be present,” said Michael Durbin, president of Fidelity Institutional Wealth Services.
One reason for the increased outreach is that clients are expressing an increased level of risk aversion, said 64% of the 350 executives who responded to a survey at the event. Another 12% noted that investors are more engaged in the investment process than they used to be. Advisers are also feeling pressure to communicate through e-mail, texts and social media, according to 7% of executives, who said that’s the biggest investor change they’ve seen.

Advisers are also spending more time on compliance requirements, devoting an average of four hours a week thinking about new ideas to differentiate their business, Mr. Durbin said.

“Certainly, in the [registered investment adviser] space — and this is an industry of relatively small firms — whether you’re a partner, principal or staff member, you have a few hats to wear,” he said. “More and more time is devoted to risk issues and compliance.” Social media is a big part of that, he said. “Clients are turning increasingly to these forums, and advisers deal with them not without peril,” Mr. Durbin said. “They have to be careful,” he said. “There is not a full body of compliance procedures” for social media, Mr. Durbin said.