Nail-biting level is high

Although the financial services industry has seen a bit of a recovery, the market for financial advisers may still experience a contraction, according to an AlixPartners LLP survey.
OCT 25, 2009
Although the financial services industry has seen a bit of a recovery, the market for financial advisers may still experience a contraction, according to an AlixPartners LLP survey. In late August, AlixPartners surveyed 1,000 households across all key demographics, including gender, age, location, education, employment status, income level and ethnicity. The participants were asked to describe their investment behavior since the financial crisis began, comment on their likely investment behavior over the next three years, and discuss how they will make investment decisions. Of those responding, 26% said that they don't plan to invest for the next three years. Another 27% said that, at best, they are “unsure” about investing during that same time frame, and 21% of those in households that earn more than $75,000 a year said that they have stopped investing in stocks and mutual funds entirely. The results point to a structural contraction of up to 26% in the market for financial services firms and advisers and suggest that financial services companies could be wasting up to 50% of their marketing budgets on those who won't or might not invest, according to Pierre Buhler and Clarence Hahn, co-leaders of the financial services practice at AlixPartners, The data also showed a gender gap. Thirty-two percent of female investors — compared with 21% of male investors — said that they won't invest over the next three years, meaning that male investors are about 50% more likely than females to invest during that time frame. Erika Safran, a certified financial planner with Financial Asset Management Corp., said she thought that responses based on a “short-term financial event” — the six-month market slump from September 2008 until March — weakened the study's implications. “It's totally understandable that 21% [of households earning more than $75,000] couldn't tolerate the financial turbulence,” she said. “But if the other 79% of my clients continued their investment course during catastrophic market conditions, that means my marketing strategy is working.”

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.