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The Innovation and Issues that RIAs, Fee-Based Advisors and Investors Care About Most

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ADVISOR AUTHORITY 2019The Future of Advice

CHAPTER 2 –SUCCESSFUL ADVISORS:The Year Over Year Trends

AdvisorAuthority

ADVISOR AUTHORITY 2019: The Future of Advice Chapter 2 – Successful Advisors: The Year Over Year Trends

LETTER FROM CRAIG HAWLEY, HEAD OF NATIONWIDE ADVISORY SOLUTIONS

DEMOGRAPHICS AND METHODOLOGY

Key Demographics of "Trended" RIAs and Fee-Based Advisors

Key Demographics of All Investors

HOW TO USE THIS REPORT

Profiling Successful Advisors

INTRODUCING OUR SUBJECT MATTER EXPERTS

EXECUTIVE SUMMARY

Seven Traits of Successful Advisors: The Year Over Year Trends

1. Stay One Step Ahead

2. Be a Tech Innovator

3. Put Clients First

4. Commit to an Exceptional Customer Experience

5. Target New Clients and Retain Heirs

6. Be Bullish on M&A

7. Have a Plan to Protect Your Clients

PROFESSIONAL INSIGHTS FROM OUR SUBJECT MATTER EXPERTS Dina Fliss President & Chief Investment Strategist, Global View Capital Advisors

Jamieson Grabenhorst Owner and Founding Partner, Horst & Graben Wealth Management

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CONTENTS:

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ADVISOR AUTHORITY:

The Innovation and Issues that RIAs, Fee-Based Advisors and Investors Care About Most

Letter from Craig Hawley, Head of Nationwide Advisory Solutions

Our commitment to RIAs and fee-based advisors inspired us to launch our award-winning Advisor Authority study, now in its fifth year. We explore the issues and innovative solutions that matter most, to help all advisors at every level tap into the tremendous potential of the independent fee-based channel.

In this latest Advisor Authority Special Report, we focus on the most successful RIAs and fee-based advisors—exploring the unique characteristics that allow them to earn more, manage more AUM and drive change in our industry. In this report, we’ll help you better understand the top traits of successful advisors—how they build and run their practice and help their clients build more wealth—so that you can learn from these high performers, gain actionable insights and recognize new opportunities that will help you attract new clients, enhance current profitability and build a foundation for the future growth of your firm.

As Advisor Authority has shown year over year, advisors must look to the future and adapt—or be left behind. The advisors poised to succeed in the face of increasing competition and the complex dynamics of today’s uncertain world are those who can differentiate themselves by focusing on holistic financial planning, adapting to new trends, adopting new technology, harnessing the benefits of Artificial Intelligence, expanding their practice by targeting new clients and creating the competitive advantage of a unique customer experience. Overarching everything, it is clear that the client must come first—a commitment RIAs and fee-based advisors have been making from day one.

Nationwide Advisory Solutions was built from the ground up with a singular focus on serving RIAs and fee-based advisors. We believe in the tremendous potential of the fee-based channel to drive new innovation, disrupt the status quo and transform the future of our industry. We have never stopped in our efforts to develop a deeper understanding of the challenges you face and the solutions that you need to succeed.

We will continue taking the pulse of RIAs, fee-based advisors and their clients, to establish benchmarks and provide you with the actionable insights that are so important for your success. We believe you’ll find our research insightful. As always, we welcome your feedback on our findings and your suggestions for next year’s study.

Sincerely,Craig HawleyHead of Nationwide Advisory Solutions

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Demographics & Methodology

This is our fifth annual Advisor Authority study on the issues and innovative solutions that RIAs and fee-based advisors care about most. It was conceived as a tool that takes the pulse of RIAs and fee-based advisors of all sizes and at every level of experience to establish benchmarks that you can use to measure your progress relative to your peers—as well as to learn from recognized leaders and industry innovators. As in previous years, we will publish a series of ongoing Special Reports that will be released throughout 2019 and into the first quarter of 2020.

Conducted on behalf of Nationwide Advisory Solutions by The Harris Poll, a leading independent market research firm, the online survey was fielded from February 15 – March 4, 2019 reflecting the viewpoints of more than 1,800 financial advisors and individual investors who reside in the U.S. This year’s study includes 1,021 advisors in total, weighted where necessary by employment status and active management to bring them in line with previous years’ profile. Among these respondents, we survey a “trended group” of 766 RIAs and fee-based advisors, who meet the same qualification criteria as in prior years of our Advisor Authority research and will continue to be the primary focus in this year’s series of Special Reports.

29%

44%

9%

15%

31%

49%

20%

ADVISOR TYPE

■ Independent RIA ■ Broker Dealer Registered Representative ■ Dually Registered

48%

38%

14%

TITLE

■ Owner or part -owner■ Management■ Non-management

28%

21%30%

19%PERSONAL

INCOME

■ Less than $100,000■ $100,000-$149,999■ $150,000-$249,999■ $250,000 or more■ Decline to Answer

ROLE

■ Investment planner■ Financial planner■ Asset manager■ Wealth manager■ Other

Gender

Total AUM Managed (Individually)

Male

Age

64% 48%

Generation X (39-54)

Millennial(18-38)

33%

Baby Boomer (55-73)

18%

Matures (74+)

2%

Female36%

%22 Less than $25 million

19% $25 to less than $50 million



14% $250 million or more

3% 3%

Advisor Authority 2019: "Trended" RIAs and Fee-Based Advisors

29%

44%

9%

15%

31%

49%

20%

ADVISOR TYPE

■ Independent RIA ■ Broker Dealer Registered Representative ■ Dually Registered

48%

38%

14%

TITLE

■ Owner or part -owner■ Management■ Non-management

28%

21%30%

19%PERSONAL

INCOME

■ Less than $100,000■ $100,000-$149,999■ $150,000-$249,999■ $250,000 or more■ Decline to Answer

ROLE

■ Investment planner■ Financial planner■ Asset manager■ Wealth manager■ Other

Gender

Total AUM Managed (Individually)

Male

Age

64% 48%


Millennial(18-38)

33%

Baby Boomer (55-73)

18%

Matures (74+)

2%

Female36%

%22 Less than $25 million




14% $250 million or more

3% 3%

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Gender

Household Investable AssetsFinancial Decision Maker

Advisor Relationship Status

Male

Age

59%

Joint Financial Decision Maker

35%

Primary Financial Decision Maker

65%

Do not have a financial advisor

38%

Have a financial advisor

62%

23%


Millennial(18-38)

25%

Baby Boomer(55-73)

44%

Matures (74+)

8%

Female41%

%59Mass Affluent $100,000 to less than $500,000

18%

Emerging HNW $500,000 to less than $1 Million

14%

HNW $1 Million to less than $5 Million

9%

Ultra HNW $5 Million or more

$

$

Among the 824 Investors, we surveyed:

Mass Affluent205

Emerging High Net Worth(Emerging HNW)

205High Net Worth(HNW)

207Ultra High Net Worth(Ultra HNW)

207

Investors are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online in order to bring them in line with their actual

proportions in the population.

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HOW TO USE THIS REPORT: PROFILING SUCCESSFUL ADVISORSTo help you learn more from the high performers who are driving innovation in our industry, this Advisor Authority Special Report examines the group we call “Successful Advisors”—the RIAs and fee-based advi-sors who earn more or manage more AUM than their peers:

The High Earning Advisor: Those with personal yearly income from advisor business of $500,000 or more.

The Advisor with High AUM: Those who individually manage a total AUM of $250 million or more.

More than two-fifths of successful advisors (42%) earn income of $500,000 or more from their advisory business, while the vast majority of other RIAs and fee-based advisors (97%) earn income of less than $500,000. Likewise, over three-quarters of these successful advisors (76%) individually manage $250 million or more, while all other RIAs and fee-based advisors (100%) individually manage less than $250 million. Successful advisors are more likely to work with over 100 clients (66%) while the majority of other RIAs and fee-based advisors are more likely to work with less than 100 clients (62%).

These successful RIAs and fee-based advisors, when compared to all other advisors, are somewhat more likely to say their profitability will increase substantially in the next 12 months (25% vs. 18%)—and are somewhat more likely to say their financial outlook for 2019 is very optimistic (24% vs. 18%). To help you understand why, we will explore the ways that these successful advisors look ahead and adapt to change so they can build an enduring franchise for the future.

How to Use this Report: Profiling Successful Advisors To help you learn more from the high performers who are driving innovation in our industry, this Advisor Authority Special Report examines the group we call “Successful Advisors”—the RIAs and fee-based advisors who earn more or manage more AUM than their peers:

Those with personal yearly income from advisor business of over $500,000.

Those who individually manage a total AUM of $250 million or more.

More than two-fifths of successful advisors (42%) earn income of $500,000 or more from their advisory business, while the vast majority of other RIAs and fee-based advisors (97%) earn income of less than $500,000. Likewise, over three-quarters of these successful advisors (76%) individually manage $250 million or more, while all other RIAs and fee-based advisors (100%) individually manage less than $250 million. Successful advisors are more likely to work with over 100 clients (66%) while the majority of other RIAs and fee-based advisors are more likely to work with less than 100 clients (62%). These successful RIAs and fee-based advisors, when compared to all other advisors, are somewhat more likely to say their profitability will increase substantially in the next 12 months (25% vs 18%)—and are somewhat more likely to say their financial outlook for 2019 is very optimistic (24% vs 18%). To help you understand why, we will explore the ways that these successful advisors look ahead and adapt to change so they can build an enduring franchise for the future. Profiling Successful Advisors

Profitability in 2019 Successful Advisors All Other RIAs/Fee-Based Advisors Increase substantially 25% 18% Somewhat increase 53% 52% Stay flat 15% 23% Somewhat decrease 6% 4% Decrease substantially * 1% Don't know/Not Sure - 1% Financial Outlook for 2019 Very optimistic 24% 18% Somewhat optimistic 33% 37% Neutral 14% 19% Somewhat pessimistic 12% 17% Very pessimistic 16% 9% Age Millennial: 18-38 years 49% 48% Generation X: 39-54 years 35% 32% Baby Boomers: 55-73 years 11% 19% Matures: 74+ years 5% 1% MEAN 41.5 41.7 AUM Individually Managed $0 to less than $25 million * 26% $25 to less than $50 million 3% 23% $50 to less than $100 million 6% 28% $100 to less than $250 million 15% 22% $250 million or More (HIGH AUM) 76% - Personal Income Less than $100,000 13% 31% $100,000 - $149,999 12% 23% $150,000 - $249,999 20% 32% $250,000 - $499,999 9% 11% $500,000 or More (HIGH EARNING) 42% - Decline to answer 4% 3% Number of Clients Working With 0 - 50 5% 22% 51 - 100 30% 40% 101 - 250 40% 29% Over 250 26% 9% Segment Size n=154 n=612

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“First, there's going to be a new emerging model that is going to give you a full end-to-end solution in one ecosystem and there will be a race to make that happen. Secondly, we're going to see the merging of wealth management, banking, and other individual services into a single ecosystem. Most importantly, the delivery of those services must be in a digital format to the end client as they don’t want to walk into a bank or a financial advisor’s office anymore.”

Dina Fliss President & Chief Investment Strategist, Global View Capital Advisors

“I think more successful advisors realize that their work is bigger than them. When it's bigger than you, you're not racing around focusing on the short term. You’re building your firm for the future and building clients’ wealth for the long run.”


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INTRODUCING OUR SUBJECT MATTER EXPERTS: We interview leading subject matter experts to provide you with a deeper understanding of the innovation and issues that matter most. In this Advisor Authority Special Report, our experts reveal what differentiates the successful advisors who earn more and manage more AUM. They discuss their approach for balancing short-term initiatives with long-term investments, and they share strategies for driving growth and enhancing profitability.

You’ll find their expert commentary at various points throughout our Special Report, as well as a more in-depth interview with each expert in a dedicated section at the end of this report. Through their innovative solutions and actionable insights, you can adapt to change, stay a step ahead and define your own path to success.

Dina FlissPresident & Chief Investment Strategist,Global View Capital Advisors

Ms. Fliss is the Founder, President and CIO for Global View Capital Management, a SEC Registered Investment Advisory firm headquartered in Milwaukee, WI. She is responsible for a series of Global Tactical strategies and portfolios offered on multiple platforms across both the U.S. & Canada. Prior to starting her own firm in 2010, Ms. Fliss was Executive Director for Investment Advisors International, an RIA firm within the AEGON Group, a global fortune 100 company. She was responsible for vetting out money managers that specialized in active management, trained and developed over 1,000 IARs on how to offer them to their clients and built out a UMA platform that eventually merged into Transamerica. She studied math and physics at the University of Wisconsin and stays connected to her vast network of like-minded innovators that have a passion to disrupt the existing financial system. She serves in Washington D.C. for the Concord Coalition, a bipartisan group advocating for fiscal responsibility. For fun she spends her time teaching and training her next generation kids, grandkids, friends and neighbors how to water ski and just have fun on Lac la Belle, the lake where she and her husband live.

Jamieson Grabenhorst Owner and Founding Partner,Horst & Graben Wealth Management Service and education are the grounding ideals of Jamieson Grabenhorst, a founding partner and financial advisor at Horst & Graben. The son of a school superintendent in Eastern Oregon, Jamieson brings that dedication to his work and considers himself a custodian of his clients’ financial futures. As an advisor, Jamieson spurns fads in investing in favor of tried-and-true investment strategies, focusing less on a single day in the markets and more on long-term plans to achieve his clients’ goals. When out of the office, Jamieson likes to play tennis and fish with his wife, Tiffany, and son Winston.

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EXECUTIVE SUMMARYSeven Traits of Successful Advisors: The Year Over Year Trends

This Special Report will help you better understand the unique characteristics that allow successful RIAs and fee-based advisors to earn more, manage more AUM and drive change in our industry, year over year. We provide you with actionable insights on how they build and run their practice and help their clients build more wealth.

Curious to know more about the seven traits of highly successful advisors? Here is our punch list. Tap into these trends of the top performers to enhance profitability now—and position your firm for the future.

1 STAY ONE STEP AHEAD.

2 BE A TECH INNOVATOR.

3 PUT CLIENTS FIRST.

4 COMMIT TO AN EXCEPTIONAL CUSTOMER EXPERIENCE.

5 TARGET NEW CLIENTS AND RETAIN HEIRS.

6 BE BULLISH ON M&A.

7 HAVE A PLAN TO PROTECT YOUR CLIENTS.

Year over year, successful advisors prove they’re the ones spotting the latest trends and setting new ones. While successful advisors remain agile and poised for growth, all other advisors tend to stick to the status quo.

Successful advisors recognize the value of adopting new technology. They use it to transform every aspect of the customer experience, from the front-end to the back office, opening the door to a new category of client, offering a new universe of products and solutions—and ultimately gaining an edge over the competition.

It all begins with a fiduciary standard. By aligning with clients’ best interests, successful advisors earn their trust, deepen the advisor/investor relationship, create greater loyalty—and ultimately bring more assets under management. Putting clients first is the foundation for a thriving practice.

From the first contact with a new client to daily communications and their annual review, successful advisors are committed to creating exceptional experiences for their clients. Most importantly, successful advisors are leveraging technology to enhance the experience for their clients.

The push for new clients remains a top driver of profits for successful advisors. To drive greater growth and build a strong base for the future of their practice, successful advisors are targeting a new generation of clients and adopting strategies to retain the heirs of their current clients.

Successful advisors understand how to adapt to industry trends like M&A to benefit their clients and the growth of their firm. They believe M&A is increasing year over year and will continue to positively impact their business.

Virtually all successful advisors have strategies in place to protect their clients against market risk and outliving savings. By thinking ahead and proactively preparing, successful advisors can differentiate themselves, provide exceptional value to their clients and create safe havens in an uncertain world.

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1. STAY ONE STEP AHEAD

It’s clear that successful advisors excel at staying one step ahead of all other advisors. Year over year, successful advisors have picked up on the preeminent issues—remaining agile and adapting to new trends in investing, advising and practice management—while all other advisors continue to stick to the status quo and risk being left behind.

So it’s no surprise that year over year, the most successful advisors are somewhat more likely than all other advisors to expect the profitability of their practice to increase over the next 12 months (79% vs. 71%). However, expectations for improved profitability declined in 2019 versus 2018 for both successful advisors (79% vs. 89%) and all other advisors (71% vs. 83%) suggesting that concerns about increasing volatility, the looming bear market and potential recession have advisors at every level concerned about the future.

1

79%

15%

6%

89%

6%

5%

83%

14%

4%

85%

11%

4%

86%

13%

1%

INCREASE

Stay flat

DECREASE

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q825. In the next 12 months, do you expect the profitability of your practice to…

PROFITABILITY OF PRACTICE

71%

23%

5%

83%

13%

3%

80%

14%

4%

74%

18%

6%

80%

14%

4%

20192018201720162015

SUCCESSFUL ADVISORS ALL OTHER ADVISORS

** “Don’t know/Not sure” responses not shown

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When it comes to enhancing profitability, year over year, RIAs and fee-based advisors continue to say that the push for new clients is the top driver. Successful advisors and all other advisors agree that in 2019 adding new clients is the number-one factor to enhance profitability (37% vs. 46%), followed by targeting HNW clients (29% vs. 25%) and adding new technology (27% vs. 25%). Meanwhile, successful advisors stay a step ahead of all other advisors and diversify their plans for profitability by putting priority into adding new hires (22% vs. 11%) and consolidating technology (21% vs. 15%).

These results suggest that successful advisors understand that profitability requires an investment in optimizing the practice, not just growing the client base. In fact, year over year data shows that successful advisors have consistently relied less on adding new clients than all other advisors and consistently put more focus on adding new technology, consolidating technology and adding new hires. In what may be the start of a new trend, this year successful advisors pulled back on adding new technology, while ramping up efforts to consolidate technology and add new hires. And this year we see a clear shift away from adding new clients as a profitability booster by both successful advisors (37% in 2019 vs. 49% in 2018) and all other advisors (46% in 2019 vs. 55% in 2018).

2

37%

29%

27%

22%

21%

49%

26%

35%

14%

16%

45%

35%

38%

15%

16%

48%

28%

31%

16%

20%

Adding newclients

TargetingHNW clients

Adding newtechnology

Adding newhires

Consolidatingtechnology

2019201820172016

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q835: What will be the most important thing you do to enhance the profitability of your practice over the next 12 months? Please select up to three.

MOST IMPORTANT SOLUTION TO ENHANCE PROFITABILITY OVER NEXT 12 MONTHS

46%

25%

25%

11%

15%

55%

33%

28%

9%

12%

55%

27%

29%

10%

10%

58%

27%

21%

10%

10%

2019201820172016


** “Attracting/Retaining client heirs,” “adding younger generations of clients,” and responses with less than 21% not shown

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2. BE A TECH INNOVATOR

First and foremost, successful advisors understand the value of harnessing technology. They make it an imperative of practice management, using it to improve efficiencies and accuracy, enhance client relationships, attract the next generation of clients—and ultimately to drive profitability. As our findings show, year over year, successful advisors are somewhat more likely than all other advisors to make adding and consolidating technology a priority for improving profitability.

Perhaps because market volatility continues to be the macro factor that concerns them most this year, successful advisors are somewhat more likely than all other advisors to say that tools for risk management, risk monitoring and portfolio stress testing are the number-one type of technology they will integrate into their practice in the next 12 months (47% vs. 38%). Successful advisors are also a clear step ahead of all other advisors in their interest in integrating Artificial Intelligence (AI) (41% vs. 27%) and robo-advisors (26% vs. 17%) into their practice in the next 12 months.

As previous Advisor Authority studies have shown, the most successful advisors are harnessing the benefits of AI to understand client behavior. They use AI to transform every aspect of the customer experience, from the front-end to the back office, opening the door to a new category of client, offering a new universe of products and solutions—and ultimately gaining an edge over the competition. Likewise, successful advisors are using robo-advisors for clients at every level—as an efficient solution for serving clients with lower AUM and even for a portion of their more affluent clients’ portfolios.

Successful advisors are also somewhat more likely than all other advisors to be interested in integrating interactive websites and/or client portals (47% vs. 38%), mobile websites and/or mobile apps (45% vs. 40%), tax optimization tools (38% vs. 35%) and account aggregation systems (34% vs. 31%). All other advisors should pick up the pace of adopting technology—or risk being left behind.

3

47%

47%

45%

41%

38%

34%

26%

-

5%

49%

48%

39%

34%

43%

31%

21%

1%

2%

51%

52%

55%

34%

39%

41%

26%

1%

3%

Tools for risk management, riskmonitoring and portfolio stress testing

Interactive website and/or client portal

Mobile website and/or mobile apps

Artificial intelligence and/or dataanalytics to understand client behavior

Tax optimization tools

Account aggregation systems

Robo-advisors

Other

Don't know/Not sure

2019

2018

2017

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q1200a: Of the following types of technology, which are you most interested in integrating into your practice in the next 12 months? Please select all that apply.

TECHNOLOGY MOST LIKELY TO BE INTEGRATED IN NEXT 12 MONTHS

38%

38%

40%

27%

35%

31%

17%

-

11%

47%

42%

44%

23%

37%

28%

16%

1%

5%

43%

43%

44%

18%

33%

34%

12%

1%

8%

2019

2018

2017


3

47%

47%

45%

41%

38%

34%

26%

-

5%

49%

48%

39%

34%

43%

31%

21%

1%

2%

51%

52%

55%

34%

39%

41%

26%

1%

3%







Robo-advisors

Other

Don't know/Not sure

2019

2018

2017



38%

38%

40%

27%

35%

31%

17%

-

11%

47%

42%

44%

23%

37%

28%

16%

1%

5%

43%

43%

44%

18%

33%

34%

12%

1%

8%

2019

2018

2017


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47%

47%

45%

41%

38%

34%

26%

-

5%

49%

48%

39%

34%

43%

31%

21%

1%

2%

51%

52%

55%

34%

39%

41%

26%

1%

3%







Robo-advisors

Other

Don't know/Not sure

2019

2018

2017



38%

38%

40%

27%

35%

31%

17%

-

11%

47%

42%

44%

23%

37%

28%

16%

1%

5%

43%

43%

44%

18%

33%

34%

12%

1%

8%

2019

2018

2017


3

47%

47%

45%

41%

38%

34%

26%

-

5%

49%

48%

39%

34%

43%

31%

21%

1%

2%

51%

52%

55%

34%

39%

41%

26%

1%

3%







Robo-advisors

Other

Don't know/Not sure

2019

2018

2017



38%

38%

40%

27%

35%

31%

17%

-

11%

47%

42%

44%

23%

37%

28%

16%

1%

5%

43%

43%

44%

18%

33%

34%

12%

1%

8%

2019

2018

2017


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3. PUT CLIENTS FIRST

Successful RIAs and fee-based advisors know that putting clients first and adhering to a fiduciary standard are paramount for the growth, health and profitability of their practice. By understanding clients’ perspectives and creating alignment with their best interests, successful advisors earn their clients’ trust, deepen the advisor/investor relationship, create greater loyalty—and ultimately bring more assets under management.

While the DOL, the SEC and various states have been engaged in their own definition of best interest, and implementing their own version of a fiduciary standard, successful advisors are somewhat more likely than all other advisors to agree that there should be one federal fiduciary standard across the financial industry (82% vs. 74%) and they are far more likely to strongly agree (55% vs. 39%). The simplicity and transparency of a uniform standard of care allow successful advisors and their clients to make more informed decisions when working towards financial goals.

4

82%

55%

27%

14%

10%

4%

3%

85%

53%

32%

12%

8%

4%

4%

AGREE

Strongly Agree

Somewhat Agree

DISAGREE

Somewhat Disagree

Strongly Disagree

Don’t Know / Not Sure

2019

2018

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q1465: Please indicate the extent to which you agree or disagree: I believe there should be one federal fiduciary standard across the financial industry.

THERE SHOULD BE ONE UNIFORM FIDUCIARY STANDARD

74%

39%

35%

21%

16%

5%

5%

77%

35%

42%

17%

11%

5%

6%

2019

2018


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Not sold on the concept? The data shows that putting clients first can help bring on new business. In fact, year over year, investors say that serving clients with a fiduciary standard is consistently among the top three factors influencing them to work with an advisor. And when it comes to strategies used to attract the next generation of investors, this year successful advisors are not only far more likely than all other advisors to say that a key factor is serving clients using a fiduciary standard (28% vs. 19%), but also say it is among the top three factors.

5

49%

25%

21%

16%

10%

9%

7%

7%

7%

6%

48%

23%

23%

19%

14%

10%

9%

11%

4%

9%

46%

26%

25%

16%

15%

12%

9%

12%

4%

8%

46%

26%

24%

15%

14%

9%

5%

12%

5%

5%

Advisor experience / years of experience

Personalized advice for a holistic financial picture

Serve clients using a fee-based fiduciary standard,instead of commission-based sales model

Highlighting historical performance

Socially responsible investing

Working more with a client's family and children

Increased use of mobile technology

Reducing fees for younger clients

Leveraging Robo-advisors or other digital portfolioallocation tools

Robust cyber security procedures2019201820172016

Base: Qualified Respondents: Investors (n=824) Q930: Which of the following would make you more likely to work with a/influenced you to work with your financial advisor?

TOP 10 FACTORS THAT INFLUENCED INVESTORS TO WORK WITH AN ADVISOR

INVESTORS

**Ten highest responses in 2019 shown

ASM-0939AO

5

49%

25%

21%

16%

10%

9%

7%

7%

7%

6%

48%

23%

23%

19%

14%

10%

9%

11%

4%

9%

46%

26%

25%

16%

15%

12%

9%

12%

4%

8%

46%

26%

24%

15%

14%

9%

5%

12%

5%

5%

Advisor experience / years of experience

Personalized advice for a holistic financial picture

Serve clients using a fee-based fiduciary standard,instead of commission-based sales model

Highlighting historical performance

Socially responsible investing

Working more with a client's family and children

Increased use of mobile technology

Reducing fees for younger clients

Leveraging robo-advisors or other digital portfolioallocation tools

Robust cyber security procedures2019201820172016

Base: Qualified Respondents: Investors (n=824) Q930: Which of the following would make you more likely to work with a/influenced you to work with your financial advisor?

INFLUENCED INVESTORS TO WORK WITH AN ADVISORINVESTORS

(Top 10 Selected)

**Ten highest responses in 2019 shown


AdvisorAuthority


15

4. COMMIT TO AN EXCEPTIONAL CUSTOMER EXPERIENCE

As consumers, we often remember brands and organizations for the experience they create for us, rather than simply the products or services they provide. Take Apple, for example. While their sleek designs are instantly recognizable, Apple is equally well known for creating a customer experience based on accessibility, responsiveness, innovation and tech-enabled solutions. Amazon and Netflix have created unique experiences by offering more choice, providing greater access and anticipating customers’ needs—to satisfy them in ways that they didn’t even expect.

Successful advisors are tapping into this same concept—creating exceptional customer experiences from the moment a client visits their website, opens their first email or sets foot in their office for a one-on-one meeting. In previous studies, we probed deeply into the customer experience and learned that advisors, especially the most successful, see it as a competitive advantage—essential for nurturing and retaining satisfied clients and fundamental to the growth and health of a profitable practice.

We continue to see that the most successful advisors are leveraging technology not only to build a better practice, but also to create a better experience for clients. In 2019, successful advisors are somewhat more likely than all other advisors to say that technology helps them free up more time to focus on one-on-one relationships with their clients (35% vs. 28%). They are somewhat more likely to use technology to protect clients against market risk (33% vs. 26%) and to provide them with more personalized holistic planning (29% vs. 25%).

6

35%

33%

29%

27%

27%

23%

22%

20%

19%

19%

Free up time to focus on one-on-one relationshipswith clients

Protect clients against market risk

Provide more personalized holistic planning

Understand clients’ current needs and behavior

Analyze and understand feedback around clients’experience and expectations

Predict clients’ future needs and behavior

Aggregate account information

Predict the impact of specific investment decisions

Measure risk tolerance

Engineer investing strategies for better returns

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) 1210: How will technology help you better serve your clients over the next 12 months? Please select up to three.

HOW TECHNOLOGY WILL HELP BETTER SERVE CLIENTS

28%

26%

25%

31%

27%

23%

24%

20%

25%

17%


** “Other” responses not shown

6

35%

33%

29%

27%

27%

23%

22%

20%

19%

19%

Free up time to focus on one-on-one relationshipswith clients

Protect clients against market risk

Provide more personalized holistic planning

Understand clients’ current needs and behavior

Analyze and understand feedback around clients’experience and expectations

Predict clients’ future needs and behavior

Aggregate account information

Predict the impact of specific investment decisions

Measure risk tolerance

Engineer investing strategies for better returns

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) 1210: How will technology help you better serve your clients over the next 12 months? Please select up to three.

HOW TECHNOLOGY WILL HELP BETTER SERVE CLIENTS

28%

26%

25%

31%

27%

23%

24%

20%

25%

17%



ASM-0939AO

https://assets.jeffnat.com/jeffnat2/cache/file/9341219E-5056-955C-5F3CBF642D78741B.pdf


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Is social media a good way to communicate with your clients? Successful advisors sure seem to think so, as their use increased considerably this year (12% in 2019 vs. 4% in 2018) and they are far more likely than all other advisors to cite it as a preferred form of communication (12% vs. 6%). As successful advisors’ use of digital communications such as email and social media is on the rise, their preference for face-to-face meeting has declined considerably this year (26% in 2019 vs. 40% in 2018). Yet all other advisors—and more importantly, all investors—continue to say that nothing can beat face-to-face.

7

26%

24%

16%

12%

4%

6%

6%

6%

40%

18%

19%

4%

7%

4%

5%

3%

39%

20%

15%

9%

4%

7%

4%

3%

Face-to-face meetings

Email

Phone call

Social media

Text messages

Video chat

Quarterly report

In-app messages

2019

2018

2017

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q935: What is your preferred form of communication with your clients?

PREFERRED FORM OF COMMUNICATION

32%

21%

20%

6%

7%

6%

5%

4%

36%

21%

23%

7%

3%

5%

4%

2%

36%

25%

22%

4%

4%

4%

4%

1%

2019

2018

2017



ASM-0939AO


AdvisorAuthority


17

5. TARGET NEW CLIENTS AND RETAIN HEIRS

While priorities are shifting, RIAs and fee-based advisors still say the push for new clients remains a top driver of profits, year over year. The most successful advisors take it a step further to differentiate their practice and specialize their services by defining and targeting their ideal client—who they are, what they do, their motivations and concerns and where they are in their life and in their financial lifecycle.

To build a foundation for the future, successful advisors say it’s important to target the next generation of investors. The trends are well known. While Baby Boomers continue to control the largest percentage of assets overall, they are shifting into retirement at a rate of 10,000 per day. The revelations that Millennials have now grown to replace Boomers as the largest cohort and that both Generation-X (Gen-X) and Millennials will grow more wealth than their Boomer predecessors are old news. Yet, there are distinct differences in which generation is the prime target for successful advisors and all other advisors.

While Millennials are greater in number, the real opportunity for successful advisors lies with Gen-X, who are in their prime earning years, poised to build more wealth over the next two decades and inherit their share of the $30 trillion “Great Wealth Transfer.” This year, successful advisors have ramped up their efforts to target Gen-X (43%), shown a slight uptick in targeting Millennials (33%), and substantial reversal away from Boomers (11%). Meanwhile, all other advisors are targeting Millennials (35%) and Gen-X (34%) equally, and they still maintain a focus on targeting Boomers (20%), while successful advisors have clearly moved on.

8

33%

43%

11%

3%

31%

38%

24%

1%

23%

36%

33%

-

27%

45%

27%

-

18%

50%

28%

-

Millennials

GenX

Boomers

Matures

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q905: Which generation of investor will be your primary target for new clients in the next 12 months?

WHICH GENERATION OF INVESTORS WILL BE YOUR PRIMARY TARGET?

35%

34%

20%

1%

26%

39%

28%

2%

24%

40%

31%

1%

17%

46%

32%

1%

19%

41%

34%

2%

20192018201720162015


** “Gen Z” and “All clients” responses not shown

8

33%

43%

11%

3%

31%

38%

24%

1%

23%

36%

33%

-

27%

45%

27%

-

18%

50%

28%

-

Millennials

GenX

Boomers

Matures

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q905: Which generation of investor will be your primary target for new clients in the next 12 months?

WHICH GENERATION OF INVESTORS WILL BE YOUR PRIMARY TARGET?

35%

34%

20%

1%

26%

39%

28%

2%

24%

40%

31%

1%

17%

46%

32%

1%

19%

41%

34%

2%

20192018201720162015


** “Gen Z” and “All clients” responses not shown

ASM-0939AO

https://www2.deloitte.com/us/en/insights/industry/investment-management/us-generational-wealth-trends.html

https://www.accenture.com/us-en/~/media/accenture/conversion-assets/dotcom/documents/global/pdf/industries_5/accenture-cm-awams-wealth-transfer-final-june2012-web-version.pdf


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18

Year over year, successful advisors have also proven to be marketing innovators. To extend their reach, build brand equity and capture their share of new clients, successful advisors are far more likely than all other advisors to change their marketing strategies to attract the next generation (76% vs. 58%).

9

76%

22%

69%

29%

73%

24%

73%

21%

77%

22%

YES

NO

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q910: Have you changed your marketing strategies to attract the next generation of investors?

HAS CHANGED STRATEGY TO ATTRACT NEXT GENERATION OF INVESTORS

58%

39%

60%

36%

59%

38%

58%

36%

55%

36%

20192018201720162015



9

76%

22%

69%

29%

73%

24%

73%

21%

77%

22%

YES

NO

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q910: Have you changed your marketing strategies to attract the next generation of investors?

HAS CHANGED STRATEGY TO ATTRACT NEXT GENERATION OF INVESTORS

58%

39%

60%

36%

59%

38%

58%

36%

55%

36%

20192018201720162015



ASM-0939AO

“We have been toying with a hybrid robo model for younger clients that allows them to 'graduate' to that next level of advice when they are ready.”


“We always have our existing clients introduce us to their kids and offer a complimentary financial plan for them… It's an investment you must make.”



AdvisorAuthority


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10

89%

9%

84%

11%

86%

9%

83%

8%

87%

11%

YES

NO

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q920: Do you have a strategy in place to retain the heirs of your current clients?

HAS STRATEGY TO RETAIN HEIRS OF CURRENT CLIENTS

72%

24%

71%

22%

70%

22%

65%

23%

67%

26%

20192018201720162015


** “Don’t know/Not sure” not shown

The most successful advisors are determined to stay engaged as wealth changes hands, despite recent studies revealing that the drop-off rates of clients’ heirs can range from 65% to as much as 90%. Year over year, successful advisors are far more likely than all other advisors to have a strategy in place to retain the heirs of their current clients, with the trend remaining strong this year (89% vs. 72%).

A proactive strategy to retain heirs may include building a multi-generational team, engaging clients’ heirs in the planning process, offering innovative wealth transfer solutions and partnering with experts such as estate attorneys. By connecting across generations, successful advisors can earn heirs’ trust, keep their business in-house and ensure the long-term success of their firm.

ASM-0939AO

https://www.investmentnews.com/article/20150713/FEATURE/150719999/the-great-wealth-transfer-is-coming-putting-advisers-at-risk

https://www.thinkadvisor.com/2016/03/01/how-advisors-can-stop-losing-clients-heirs-as-clients/


AdvisorAuthority


20

6. BE BULLISH ON M&A

Change is good. But it’s not always easy. Successful advisors embrace change to position their firms for future growth, including trends such as industry M&A. Year over year, successful advisors have been somewhat more likely than all other advisors to say M&A activity in the RIA industry will increase.

This year the difference has grown even wider, with nearly three-fourths of successful advisors (71%) expecting M&A to increase in the next 12 months, compared to just a little over half of all other advisors (56%). Note that this is the lowest percentage of advisors to predict increased activity since the study’s launch, suggesting they are concerned that the market and the economy may erode valuations and decrease opportunities for transactions.

11

71%

22%

3%

75%

19%

5%

76%

17%

4%

73%

19%

5%

77%

20%

2%

INCREASE

Stay flat

DECREASE

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q855: How do you expect consolidation/M&A activity in the RIA industry to change in the next 12 months?

EXPECT CHANGE IN CONSOLIDATION/M&A ACTIVITY IN RIA INDUSTRY

56%

35%

6%

67%

25%

5%

69%

21%

5%

67%

21%

7%

62%

27%

6%

20192018201720162015



ASM-0939AO

“We're trying to help aging advisors understand the natural trajectory of what's going to happen in their succession plan and then create an M&A type strategy internally in the firm. You have to plan.”



AdvisorAuthority


21

Still, year over year, successful advisors are more bullish about the impact of M&A on their business. This year, successful advisors are far more likely than all other advisors to say that M&A activity in the RIA industry will have a positive impact their business in the next 12 months (64% vs. 48%).

12

64%

23%

12%

57%

32%

8%

61%

26%

10%

62%

23%

11%

72%

22%

5%

POSITIVELY

No impact

NEGATIVELY

20192018201720162015

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q860: How will consolidation/M&A activity in the RIA industry impact your business in the next 12 months?

IMPACT OF CONSOLIDATION/M&A ACTIVITY IN RIA INDUSTRY

48%

37%

12%

49%

33%

12%

47%

35%

12%

43%

36%

16%

46%

36%

12%

20192018201720162015



ASM-0939AO

“I agree with the data that M&A is positive, ultimately, and I also see it increasing… I’m excited for M&A because ultimately, I think more clients are going to get better service as a result.”



AdvisorAuthority


22

13

36%

35%

33%

31%

27%

25%

24%

22%

20%

32%

30%

38%

27%

26%

34%

22%

34%

17%

35%

39%

33%

33%

25%

18%

27%

27%

21%

35%

29%

40%

35%

24%

27%

21%

29%

18%

Greater resources to serve my clients

Greater resources to expand/scale mybusiness

Scale allows increased investments intechnology

Increased opportunities to buyanother practice

Allow me to create a succession plan

Increased opportunities to sell mybusiness

Allow me to provide ongoingemployment for my existingemployees

Increased opportunities to merge withanother business

Smaller competitor set

2019201820172016

Base: Said Positive Impact: Successful Advisors (n=97*); All Other Advisors (n=327) Q865 : Why do you feel positively about the effect of M&A on the RIA industry? Please select up to three.

WHY POSITIVE ABOUT CONSOLIDATION/M&A ACTIVITY IN RIA INDUSTRY

30%

30%

27%

25%

28%

27%

23%

28%

22%

40%

36%

27%

24%

26%

23%

22%

20%

19%

44%

30%

22%

28%

25%

21%

26%

20%

24%

37%

36%

25%

31%

24%

19%

18%

25%

25%

2019201820172016


** “Other” not shown; * Sample size less than 100

Consolidation among firms is driven by a variety of factors—including increasing competition, rising fee compression, the need for greater scale and succession planning as the industry ages. Regardless, advisors who say M&A activity would have a positive impact on their business agree that the number-one reason they are positive about the effect of M&A is that it allows them to provide greater resources to serve their clients.

As more large firms drive deal flow, it’s no surprise that successful advisors are somewhat more likely than all other advisors to say M&A activity increases opportunities to buy another practice (31% vs. 25%) and somewhat less likely to say it increases opportunities to sell their business (25% vs. 27%).

13

36%

35%

33%

31%

27%

25%

24%

22%

20%

32%

30%

38%

27%

26%

34%

22%

34%

17%

35%

39%

33%

33%

25%

18%

27%

27%

21%

35%

29%

40%

35%

24%

27%

21%

29%

18%










2019201820172016



30%

30%

27%

25%

28%

27%

23%

28%

22%

40%

36%

27%

24%

26%

23%

22%

20%

19%

44%

30%

22%

28%

25%

21%

26%

20%

24%

37%

36%

25%

31%

24%

19%

18%

25%

25%

2019201820172016



13

36%

35%

33%

31%

27%

25%

24%

22%

20%

32%

30%

38%

27%

26%

34%

22%

34%

17%

35%

39%

33%

33%

25%

18%

27%

27%

21%

35%

29%

40%

35%

24%

27%

21%

29%

18%










2019201820172016



30%

30%

27%

25%

28%

27%

23%

28%

22%

40%

36%

27%

24%

26%

23%

22%

20%

19%

44%

30%

22%

28%

25%

21%

26%

20%

24%

37%

36%

25%

31%

24%

19%

18%

25%

25%

2019201820172016



13

36%

35%

33%

31%

27%

25%

24%

22%

20%

32%

30%

38%

27%

26%

34%

22%

34%

17%

35%

39%

33%

33%

25%

18%

27%

27%

21%

35%

29%

40%

35%

24%

27%

21%

29%

18%










2019201820172016



30%

30%

27%

25%

28%

27%

23%

28%

22%

40%

36%

27%

24%

26%

23%

22%

20%

19%

44%

30%

22%

28%

25%

21%

26%

20%

24%

37%

36%

25%

31%

24%

19%

18%

25%

25%

2019201820172016



ASM-0939AO


AdvisorAuthority


23

7. HAVE A PLAN TO PROTECT YOUR CLIENTS

With volatility on the rise, it should come as no surprise that successful advisors are more likely than all other advisors to have a strategy in place to protect their clients against market risk (94% vs. 86%).

14

94%

5%

93%

6%

YES

NO

20192018

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q8010: Do you currently have a strategy in place to help your clients protect their assets against market risk?

HAS STRATEGY TO PROTECT AGAINST MARKET RISK

86%

11%

93%

5%

20192018



ASM-0939AO

“What's your game plan to manage your wealth in a severe economic and market downturn? Because it is going to happen—we just don't know when.”



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24

Of those with a strategy to protect clients against market risk, successful advisors are somewhat more likely than all other advisors to say diversification is the most utilized solution (71% vs. 60%). Successful advisors and all other advisors use many of the same solutions to help clients capture more upside, while protecting against downside, including fixed annuities (55% vs. 52%), liquid alternatives (49% vs. 43%), fixed index annuities (both 48%) and market linked CDs (35% vs 32%). To provide clients with a more comprehensive approach, successful advisors use certain solutions more than all other advisors, including smart beta ETFs (40% vs. 24%), non-correlated assets (44% vs. 24%) and put options (36% vs. 22%).

15

71%

55%

49%

48%

44%

40%

36%

35%

9%

2%

66%

62%

59%

57%

40%

43%

28%

43%

15%

2%

Diversification

Fixed Annuity

Liquid Alternatives

Fixed Index Annuity (FIA)

Non-Correlated Assets

Smart Beta ETF

Put Options

Market-Linked CDs

Other Principal ProtectionProducts

Other

2019

2018

Base: Have A Strategy To Protect Assets Against Market Risks: Successful Advisors (n=144); All Other Advisors (n=511) Q8015. Which of the following solutions do you use to help your clients protect their assets against market risks? Please selectall that apply .

SOLUTIONS USED TO PROTECT AGAINST MARKET RISK

60%

52%

43%

48%

24%

25%

22%

32%

11%

2%

62%

54%

36%

46%

33%

25%

17%

29%

14%

3%

2019

2018


ASM-0939AO

“I can build model portfolios… But now when we have a market downturn, I want to be able to push a button and have downside protection as well as a plan and strategy for my clients across my entire book of business.”



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25

As lifespans increase, while the safety net comes into question, the retirement income challenge is real and growing. To help clients prepare for and live in retirement that could last three decades or more, successful advisors are also more likely than all other advisors to have a strategy in place to protect their clients against outliving their savings (95% vs. 85%).

16

95%

5%

92%

6%

YES

NO

2019

2018

Base: Qualified Respondents: Successful Advisors (n=154); All Other Advisors (n=612) Q8006: Do you currently have a strategy in place to help protect your clients against outliving their savings?

HAS STRATEGY TO PROTECT AGAINST OUTLIVING SAVINGS

85%

12%

93%

3%

2019

2018



ASM-0939AO

“Being a fiduciary, to me, is so important. When you're not trying to sell clients on individual products, when you are holistically looking at their entire plan, it makes a world of difference.”



AdvisorAuthority


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Of those with a strategy to help clients protect against outliving savings, successful advisors are somewhat more likely than all other advisors to use a range of annuities to help clients generate more retirement income—and protect that income for life—including variable annuities with living benefit riders (60% vs. 51%), qualifying longevity annuity contracts (QLACs; 46% vs. 32%) and contingent deferred annuities (CDAs; 34% vs. 27%).

Successful advisors are also more likely than all other advisors to incorporate defined benefit plans (59% vs. 36%), dividend yielding stocks (56% vs. 41%), fixed income ladders/bond ladders (54% vs. 48%) and yield generating ETFs (47% vs. 37%). Successful advisors are only slightly more likely than all other advisors to use Social Security (54% vs. 51%), Single Premium Immediate Annuities (SPIAs; 40% vs. 38%) and longevity insurance/deferred income annuities (DIAs; 40% vs. 37%).

17

60%

59%

56%

54%

54%

47%

46%

40%

40%

34%

4%

66%

48%

63%

64%

52%

48%

45%

42%

48%

39%

-

Variable Annuity with Living BenefitRiders

Defined Benefit Plan/Pension

Dividend Yielding Stocks

Social Security

Fixed Income Ladder/Bond Ladders

Yield Generating ETFs/IncomeGenerating ETFs/Multi-Asset ETFs

Qualifying Longevity AnnuityContract (QLAC)

Single Premium Immediate Annuity(SPIA)

Longevity Insurance/DeferredIncome Annuity (DIA)Contingent Deferred Annuities(CDAs)

Other

2019

2018

Base: Have a Strategy in Place to Protect Against Outliving Savings: Successful Advisors (n=144); All Other Advisors (n=508) Q8007. Which of the following solutions do you use to help protect your clients against outliving their savings? Please select all that apply.

SOLUTIONS USED TO PROTECT AGAINST OUTLIVING SAVINGS

51%

36%

41%

51%

48%

37%

32%

38%

37%

27%

2%

54%

39%

47%

60%

46%

37%

26%

38%

36%

22%

4%

2019

2018


ASM-0939AO


AdvisorAuthority


27

TOP FINANCIAL CONCERNS OVER THE NEXT 12 MONTHS: INVESTOR/ADVISOR ALIGNMENT CHECK

Saving enough for retirement

Cost of healthcare

Protecting assets

Taxes

Generating reliable income during retirement

Outliving retirement savings

Managing volatility

Rising interest rates

Financing children's education

Inflation

Financing a home

Transferring wealth to heirs

Financing another large expense, such as wedding/vehicle, etc.

Caring for aging parents

Falling interest rates

Charitable giving 3%

5%

6%

7%

8%

11%

12%

13%

22%

23%

26%

26%

27%

28%

33%

39%

3%

4%

6%

9%

8%

8%

15%

12%

9%

13%

14%

20%

23%

33%

30%

28%

11%

3%

4%

1%

20%

5%

12%

7%

12%

16%

10%

18%

29%

40%

22%

15%

4%

4%

3%

4%

12%

2%

9%

4%

6%

18%

19%

24%

32%

41%

40%

15%

All Investors

High Net Worth

Ultra High Net Worth

All Advisors

Investors remain more concerned about protecting assets: Advisors rate protecting assets third (28%), while investors rate it number one (33%). These concerns increase for the HNW (41%) and Ultra HNW (40%). Take the time to understand why—and proactively educate clients on effective solutions for protecting assets.

Advisors have an opportunity to educate clients on retirement: Investors are somewhat less concerned about saving enough for retirement and outliving retirement savings than advisors believe. Help educate clients on the importance of prioritizing plans to prepare for and live in retirement. But note that among the HNW and Ultra HNW, concerns about saving enough for retirement decline dramatically.

Advisors more attuned to clients’ concerns about the cost of healthcare: Just as investors cite cost of healthcare second (30%), this year advisors also cite it second (33%), up from fifth (24%) last year.

Advisors more attuned to clients’ concerns about taxes: Investors cite taxes fourth (23%), and this year advisors now cite taxes fourth (27%), up from sixth (22%) last year. Note that concerns rise among affluent clients, with the HNW rating taxes third (32%) and Ultra HNW rating taxes second (29%).

Investors more concerned about inflation than advisors may realize: Advisors rate inflation tenth (12%) while investors rate it sixth (15%). Take this opportunity to learn why—and proactively educate clients on effective solutions to hedge against inflation.

“You have to get the experience to earn a client’s trust. And where you don’t have the experience, you need to leverage others’

experience. You need to build the right partnerships, and engage the right experts. In fact, the importance of partnerships

never stops—even for the most seasoned and experienced advisors.”

Jason Pinkham, Managing Director, Relationship Management & Transition Services, Dynasty Financial Partners

PLACEHOLDER

AdvisorAuthority

SUCCESSFUL ADVISORS: The Year Over Year Trends

PROFESSIONAL INSIGHTSFROM OUR SUBJECT MATTER EXPERTSWe interview leading subject matter experts to provide you with a deeper understanding of the innovation and issues that matter most. In this Advisor Authority Special Report, our experts reveal what differentiates the successful advisors who earn more and manage more AUM. They discuss their approach for balancing short-term initiatives with long-term investments, and they share strategies for driving growth and enhancing profitability. Through their innovative solutions and actionable insights, you can adapt to change, stay a step ahead and define your own path to success.


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Advisor Authority: Successful advisors are somewhat more likely than all other advisors to agree that there should be one federal fiduciary standard across the financial industry (82% vs. 74%) and they are far more likely to strongly agree (55% vs. 39%). Why do you think this is?FLISS: Unless you've worked in a conflicted environment, you can look at this superficially and agree that everybody should be held to the same standard for the benefit of the client. Leveling fees does help remove conflicts of interest for the rep or the financial advisor, but there's another level of conflict that's happening at firm levels. There are so many layers of the onion that it is unclear to investors how costs are factored in. It's naive for a generation of investors to think that everything that isn’t commission-based is free. I think that if we're going to go to a fiduciary standard, let's lift the rock and let the light of day shine on it. Let's make everything—including fees—transparent.

AA: What do you see happening in the future of technology for the world of financial advice?FLISS: Two things. First, there's going to be a new emerging model that is going to give you a full end to end solution in one ecosystem and there will be a race to make that happen in the FinTech world as this is the next best thing. Secondly, we're going to see the merging of wealth management, banking, and other individual services into a single ecosystem. Most importantly, the delivery of those services must be in a digital format to the end client as they don’t want to walk into a bank or a financial advisor’s office anymore. As client behavior changes rapidly, investors want these services on demand. The big companies already have this, but they're so focused on Baby Boomers because this generation is currently driving their revenue. They're ignoring the fact that the next generation coming up behind Boomers is going to demand technology.

AA: Why do you think successful advisers have shifted away so quickly from face–to–face meetings as a preferred method of communication this year? FLISS: We're moving into the digital age and consumer behavior is shifting very rapidly. The industry itself needs to be able to give us the systems to do that. With Zoom and FaceTime there are so many ways that people can digitally interface. If you're my client,

however we communicate is up to us. As long as the trust is there, the method of communication can be adapted.

AA: Talk to us about retaining heirs. What are the strategies you use?FLISS: We always have our existing clients introduce us to their kids and offer a complimentary financial plan for them. You’re unlikely to make much revenue from that next generation client at this point in time, but it begins to solidify important relationships. It's an investment you must make, but not every financial advisor and firm is willing to do that. If you don't do it, when the Boomers pass away most of their kids will take their money elsewhere.

AA: This year, successful advisors have ramped up their efforts to target Gen-X (43%), shown a slight uptick in targeting Millennials (33%), and substantial reversal away from Boomers (11%). Where do you see the most potential when it comes to a new generation of clients? FLISS: Definitely the younger generation. If you look at Boomers, they're either at or almost in retirement. They have different needs than a young person who's coming out of school trying to pay debt, get married, form a household, have kids and are worrying about paying the bills. There's not a lot of excess cash flow because they're not yet in their peak earning years and are taking on a lot of debt to form households. When I started my career 30 years ago, we didn't charge for a financial plan and all our clients were pretty much within our same age group. Nobody had any money, and everybody had debt. We had to teach new investors how to dollar-cost-average and invest money over the long-term. The problem in the fee-based world is that it's very difficult to make a living when your client can only invest a few hundred dollars a month and the platform you're working on has a minimum investment size of $25,000?

AA: If you could ask 700 advisors and 700 investors one question, what would it be?FLISS: What's your game plan to manage your wealth in a severe economic and market downturn? Because it is going to happen—we just don't know when.

Advisory Services offered through Global View Capital Advisors are not affiliated with Nationwide Advisory Solutions.

Ms. Fliss is the Founder, President and CIO for Global View Capital Management, a SEC Registered Investment Advisory firm headquartered in Milwaukee, WI. She is responsible for a series of Global Tactical strategies and portfolios offered on multiple platforms across both the U.S. & Canada. Prior to starting her own firm in 2010, Ms. Fliss was Executive Director for Investment Advisors International, an RIA firm within the AEGON Group, a global fortune 100 company. She was responsible for vetting out money managers that specialized in active management, trained and developed over 1,000 IARs on how to offer them to their clients and built out a UMA platform that eventually merged into Transamerica. She studied math and physics at the University of Wisconsin and stays connected to her vast network of like-minded innovators that have a passion to disrupt the existing financial system. She serves in Washington D.C. for the Concord Coalition, a bipartisan group advocating for fiscal responsibility. For fun she spends her time teaching and training her next generation kids, grandkids, friends and neighbors how to water ski and just have fun on Lac la Belle, the lake where she and her husband live.


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Advisor Authority: Our data shows successful advisors are using robo-advisors and artificial intelligence more than all other advisors. But they still say that face-to-face communication is the number one way they want to communicate with their clients. Does this surprise you?GRABENHORST: Not at all. Younger clients are certainly more willing to use these technologies. I think there is a place for robo-advising, but it's amazing to me how many clients we've picked up who had been on robo-advising but get nervous once their money grows. They want somebody to talk to who knows them, who knows their situation. If their money grows quickly, I can see why they get nervous: a computer is trading their account. We have been toying with kind of a hybrid robo model for younger clients That allows them to “graduate” to that next level of advice when they are ready.

AA: Successful advisors are way more likely than all other advisors to have a strategy in place to protect their clients. Why do you think there is such a gap here?GRABENHORST: I think it has to do with the average age of advisors. This is a tough business, especially for the men and women who grew up in the '90s or late '80s. It's an absolutely rewarding job, it is so much fun, but it's stressful. I think at a certain point, advisors get set in their ways. After all, if something has worked for them for so long, why would they change anything? Let's say I'm a 70-year-old male advisor. I've been trading stocks on commission forever and planning isn’t a big part of my practice. Everybody knows that model isn’t the future, but maybe I’m only going to work two more years. So, what does it really matter? Why would I reinvent myself?

AA: Nearly three-fourths of successful advisors expect M&A to increase in 2019 and more than 64% of successful advisors believe it will have a positive impact in the industry. Why do you think successful advisors are more likely to feel positive about M&A? And where do you stand on M&A? GRABENHORST: I agree with the data that M&A is positive, ultimately, and I also see it increasing. Going back to the older average age of an advisor, you know it will increase over the next few years. There will be a lot of turnover coming in this industry. At my practice, we’ve been fortunate to cultivate a sustainable practice over the last 20 years, and we have growth targets for ourselves to continue to grow. But I think there are a lot of advisors

in their late 60s or early 70s who don’t have a succession plan. They’re working out of their house and have a roughly $70 million book. I see those advisors as a huge, ripe target. I’m excited for M&A because ultimately, I think more clients are going to get better service as a result. AA: This year, successful advisors have ramped up their efforts to target Gen-X (43%), shown a slight uptick in targeting Millennials (33%), and substantial reversal away from Boomers (11%). Where do you see the most potential when it comes to a new generation of clients?GRABENHORST: An ideal client for my practice is an attorney, a doctor, or other high-income earner who is in their mid-40s. When we work with a client that fits that description, I'm probably more excited about that relationship than landing a $5 million account from a Boomer because I know this could be a long-term relationship. The most sustainable strategy when targeting Boomers is to integrate their entire family into the conversation. I recently started working with a retired doctor with over $5 million of assets, but the whole discussion involved their son and daughter who are in their late 30s. Family planning is going to be huge in the next decade or so as we will see more wealth transfer from one generation to another in the next 20 years than we've ever seen, historically.

AA: If you could ask 700 advisors one question, what would it be? GRABENHORST: I'd be curious how other advisors have been able to find a work/life balance. How have they found the balance of giving their all to their clients, giving their all to their business, and being able to do the same thing on the home front?

AA: And if you could ask 700 investors one question, what would you want to know?GRABENHORST: When working with an advisor, what is it they're really looking for? I think I know the answer, but I'd be curious to hear what makes investors feel comfortable working with somebody, knowing that they’re being taken care of.

Advisory Services offered through Horst & Graben Wealth Management are not affiliated with Nationwide Advisory Solutions.

Service and education are the grounding ideals of Jamieson Grabenhorst, a founding partner and financial advisor at Horst & Graben. The son of a school superintendent in Eastern Oregon, Jamieson brings that dedication to his work and considers himself a custodian of his clients’ financial futures. As an advisor, Jamieson spurns fads in investing in favor of tried-and-true investment strategies, focusing less on a single day in the markets and more on long-term plans to achieve his clients’ goals. When out of the office, Jamieson likes to play tennis and fish with his wife, Tiffany, and son Winston.

AdvisorAuthority

MethodologyThe fifth annual Advisor Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide Advisory Solutions from February 15 – March 4, 2019 among 1,021 financial advisors and 824 investors, ages 18+. Among the 1,021 financial advisors, there were 507 Registered Investment Advisors and 514 Broker/Dealers. Among these respondents, a “trended group” of 766 RIAs and fee-based advisors, who meet the same qualification criteria as in prior years of our Advisor Authority research, continue to be the primary focus in this year’s series of Special Reports. Among the 824 investors, there were 205 Mass Affluent (Household Investable Assets of $100,000 to less than $500,000), 205 Emerging High Net Worth ($500,000 to less than $1 Million), 207 High Net Worth ($1 Million to less than $5 Million) and 207 Ultra High Net Worth ($5 Million or more). Advisors are weighted where necessary by employment status and active management to bring them in line with previous years’ profile. Investors are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population.

Field Periods:

2019 February 15 – March 4

2018 January 3 – February 21

2017 March 13 – April 7

2016 March 3 – March 28

2015 April 13 – April 24

Reading this ReportResponses may not add up to 100% due to weighting, computer rounding, or the acceptance of multiple responses.

About Harris PollThe Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas; building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.

About Nationwide Advisory SolutionsNationwide Advisory Solutions is a recognized innovator with a mission to help RIAs and fee-based advisors build their practice by helping their clients to potentially accumulate more wealth and reach their financial goals. Nationwide Advisory Solutions does this by developing and delivering value-added investment products, services and technologies that dovetail with fiduciary obligations—wrapped in an industry-leading customer experience. To learn more, please visit www.nationwideadvisory.com

About NationwideNationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor’s. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.

Nationwide, Nationwide is on your side, the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. © 2019

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