Asset Management Industry Trends

More Financial Services Firms Offer Planning

The relaxation of regulations that separated brokerage, insurance, and banking has led to the creation of large financial services companies like Citicorp, Bank of America, AXA, and American Express that offer a large range of investment products. Such companies offer financial planning services to individuals in the hope of capturing all of the customer's financial business.

Moving from Commissions to Fees

According to FPtransitions, financial planning firms have three business models: fee-based (56 percent); fee-only (8 percent); and commission-based (36 percent). More financial planners are changing their compensation models from commissions to fees. Advisors benefit from fee-based models as steady revenue is generated even if they're out of the office, and reduces the roller-coaster ride commissions generally create. Compared to flat fees or commissions that can easily cost hundreds, the hourly fee model (even though some advisors charge upward of $100 an hour) could save clients money.

Investment Management

Financial planning is increasingly being equated with investment management. More financial planners are managing investments in addition to just practicing financial planning, according to Financial Planning Association. In the bull market of the 90s, planners had difficulty distinguishing themselves from advisors, because clients wanted to discuss primarily how well their investments were doing and what new investments they should consider.

Multidisciplinary Practices

The multidisciplinary practice (MDP), a firm with several types of professionals working in-house (CFP, CPA, CLU, CFA, JD, etc.), is a slowly emerging trend in the financial advisory business. Americans are increasingly looking for one-stop shopping in financial services. According to the Journal of Financial Planning, the MDP process is still in its early stages.

Coaching Trend

More financial planners are becoming life planners and coaches to clients, a concept similar to one in counseling services. Financial planners use "values-based planning" to help individuals with complex financial and emotional decisions, such as marriage, loss of parents or spouse, parenting, or divorce.