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2023 Trends in Financial Planning

As the year ends, firms are focusing on getting through the holiday season and closing out the fourth quarter strong. However, just as the COVID-19 pandemic is waning, inflation and headwinds have taken center stage.

These developments will affect how advisors think, invest, and operate, in addition to other factors. While there will be difficulties, there are opportunities for those who adjust and adapt. In 2023, wealth management will be characterized by the following 5 trends.

Planning For Inflation
Inflation reached 40-year highs in 2022. While some inflation is good, persistently high levels threaten economic growth.

The COVID-19 lockdowns, Russia’s invasion of Ukraine disrupting supply chains, shortages of workers, and many other factors have negatively impacted the economy and consumers’ wallets.

As the Federal Reserve has raised its short-term borrowing rate seven times to curb inflation, inflation appears to be slowing down. There is still a long way to go, and as rates rise, recession probabilities increase.

Generational Wealth Transfers Are On The Rise
The “Great Wealth Transfer” has been discussed for the last few years and has manifested itself more each year.

Baby Boomers, roughly defined as those born from 1940 to 1960, are already retiring and are expected to continue to do so. Cerulli Associates estimates that up to $84.4 trillion in wealth will transfer by 2045, $53 trillion coming from Boomers, who will pass on much of that wealth to their children and grandchildren as they retire.

Advisors need to consider their older clients. What are their plans for passing on their wealth and assets to their beneficiaries? When the beneficiaries inherit money, who will manage it? As firms strive to stay ahead, they will need to consider older clients AND their beneficiaries to retain their business for years to come.

Wealth Planning Becomes Increasingly Market Segmented
Advisors must adjust as wealth passes down and the millennials and Gen Z become a larger market.

Both of these generations are also tech-savvy and socially conscious, so they’ll also expect you to be. As you take on their business, you’ll see that they strive to make investments that reflect their values and beliefs.

Advisors should carefully segment their clientele and cater to them to maximize revenue and quality of client service.

Hybrid Work Culture Will Be A Permanent Part of Wealth Management
The transition from the office to the home has been thriving since March 2020, according to a PwC report. Over 70% of financial services employers found working from home to be successful. In fact, 96% of financial services professionals would be willing to take a pay cut to work from home permanently.

As the number of employees who commute to and from work decreases, many workers are less tolerant of commutes as they can do their work more efficiently from home. However, face-to-face meetings and collaboration remain necessary, but are they necessary 5 days a week? Probably not.

You will be doing employees a favor by allowing them to avoid or minimize commuting to and from work. Not offering a hybrid work environment will hinder attracting new talent.

More Advisory Firms = Fewer Winners
Over the last decade, the number of registered investment advisors in the United States has grown to about 14,800.

Although wealth management services and talent are in high demand, there is a threat that a disproportionate amount of assets could be concentrated in fewer advisors’ hands.

Advisors must adapt technologically to stay ahead with growing competition and an increasingly digital atmosphere.

There are many ways to stay on top in the financial planning industry, and you can start by keeping an eye on these trends.

If you want to stay ahead of the competition and make an impression, reach out to Nifty today!


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