The long-term challenges of a generational wealth transfer and shorter-term economic uncertainties aren't enough to dampen advisors' optimism on the growth of their businesses, according to the results of a new survey by Natixis.

Natixis Investment Managers’ 2024 Survey of Financial Professionals, which polled 300 US financial advisors as part of a broader global study, revealed American advisors are tageting an asset growth rate of 11 percent over the next three years, with an organic growth goal of 16 new clients per year on average.

While financial advisors have successfully navigated recent market upheavals, including high inflation and a historic interest rate hike cycle, they now face longer-term pressures. At the top of that list is the Great Wealth Transfer, in which an estimated $84 trillion will pass between generations over the next two decades.

The generational wealth transfer: threat or opportunity?

Forty-one percent of advisors see that wealth tsunami as a potential existential threat to their businesses, with 30 percent concerned about retaining assets from clients’ spouses or heirs. Notably, advisors said they only maintain 58 percent of client relationships when assets are inherited by the next generation, down from 78 percent when the spouse inherits.

"Advisors have had to demonstrate their flexibility and ability to navigate historically challenging market dynamics in recent years. Now, they need to flex their strategies even more to appeal to the next generation of investors,” David Goodsell, executive director of the Natixis Center for Investor Insight, said in a statement revealing the findings.

When asked what they could do to retain assets, an overwhelming majority of advisors pointed to relationship-building as the top course of action, with 92 percent supporting the idea. To create stickier bonds with the next generation, 85 percent of advisors said they regularly discuss family wealth planning with clients, and 87 percent said they bring family members into the conversation. Additionally, many are offering personalized services like trust services (55 percent) and unified managed accounts (21 percent) to keep clients engaged.

Election worries run rampant

In the immediate term, election uncertainty is weighing heavily on advisors’ minds, with 88 percent saying their clients are concerned about how the outcome of the presidential race could impact their investments. Still, 85 percent of advisors see the broader economic fundamentals as more significant than short-term election results, with public debt ranking as the top concern for 68 percent of those surveyed. 

While advisors are well aware of the need to acquire assets through client prospecting, the survey found they currently dedicated only 8 percent of their time to it.

A reported 96 percent of advisors are targeting pre-retirees, which Natixis defined as those between 50 and 60 years old, but far fewer are focusing on younger clients, with just 14 percent prioritizing those between 18 and 35. Social media and AI-powered tools are becoming important components of prospecting efforts, as 43 percent of advisors look to enhance their efficiency in attracting new clients.

The power of model portfolios

Model portfolios are another tool that advisors are increasingly using to manage their time more effectively. The survey found that 94 percent of advisors employ model portfolios, with 71 percent noting that they simplify rebalancing and portfolio changes. By utilizing these models, 65 percent of advisors said they're able to make their investments more consistent, while 62 percent have been able to free up time for higher-touch services such as financial planning.

“Our portfolio consulting practice shows that core moderate-risk model portfolios consistently deliver higher risk-adjusted returns with less volatility than the broad market, enabling advisors to focus more time on long-term goals, than short-term performance,” said Marina Gross, head of Natixis Investment Managers Solutions.