Recent LIMRA research shows that when young advisors seek support from financial service organizations the top request usually involves obtaining leads and references to pursue new clients.
A closer look at the research reveals 1 in 4 also said learning to run a business was among their top challenges. While this finding might be expected for those just starting their careers, demand for practice management support is increasing beyond the young professional
In 2014, LIMRA surveyed independent financial professionals (IFPs) and found that 1 in 4 advisors are still establishing their practice, yet 67 percent of all IFPs surveyed said business support is a critical factor to their success. Findings from the survey suggested that when companies work with IFPs they might consider offering practice management services as part of their support.
There are several reasons to suggest why practice management support is in more demand now than in the past. Advisors today must be able to understand and explain complicated financial products to an increasingly complex client base. Advisors are also expected to understand and deliver the right solutions for clients of different generations and culturally diverse backgrounds, each of which have unique needs Wholesaling is a key strategy that can provide the support advisors need to grow their practice.
Advisors today also express concern over how the regulatory and compliance environment will affect them. In one LIMRA survey, more than a third of independent and career advisors perceive a negative impact on their business if a uniform fiduciary standard is implemented. Advisors’ comments on how it might impact their practice included concerns about increasing paperwork, creating additional compliance costs, and offering little to no benefit to clients.
Finally, for all the opportunities technology can provide to a financial professional, it also adds a layer of complexity to running the business. LIMRA research shows that when companies implement new technology they can confront some formidable and conflicting obstacles. Among the top challenges, resistance or lack of buy-in by financial professionals was cited by 62 percent of the companies, edged out only by the lack of IT resources cited by 63 percent of companies. For some advisors technology can represent an unwelcome change to their business, while others are demanding more. Among young advisors, 78 percent said technology tools for client services was the most important sales support they could receive. Three quarters of young advisors said technology tools designed to manage their practice was the most valuable support.
Basic business challenges are not unique to financial services. In 2013, email marketer Constant Contact surveyed small businesses and found that 59 percent of respondents said it’s harder to run a business now than it was five years ago. The top reasons they cited were the economy, keeping pace with technology and an increase in direct competition.
So while leads and references are essential, the challenge of running a business is also top of mind with today’s advisor.