Three investor trends that could fuel the evolution of the financial professional

1 The need and demand for holistic solutions

Over the eight years John Hancock has been producing our annual survey of financial stress among retirement plan participants, we’ve seen growing interest among plan sponsors and financial professionals in holistic financial advice delivered at the workplace. That interest may have reached an inflection point.

In an industry survey, “improving overall financial wellness of employees” came up as the number one priority among 401(k) plan sponsors, identified by one-quarter of respondents. This places it above such expected choices as reducing plan costs, improving the investment lineup, and even maximizing retirement savings.

2 Longevity is on the rise

According to United Nations data,¹ U.S. life expectancy reached a record 79.05 years in 2022, the fourth straight annual increase—and lifespans are expected to rise continually over the next few decades.

While elder years can certainly be fulfilling and enjoyable, they also present a cascade of challenges that may not be clearly in focus when retirement income goals are first set. Some may continue working out of need or preference; often, there’s one or more changes in living arrangements, and both lifecare and healthcare are ever-present concerns.

In other words, life in retirement doesn’t always go as planned.

The thing about these later-in-life challenges is that they require tight-knit decisions, often involving logistics, safety, and emotions as well as money. Anyone who’s ever sought a coveted apartment or long-term care slot for a parent knows that decision-making timeframes can be incredibly short. Your firm can help make things easier.

Your staff and referral network may already offer assistance with traditional retirement income, investment, income-tax, and estate planning. But what if you were also more closely tuned to the lifestyle dynamics that often drive seniors’ financial realities—the need for transportation, caregiving, appropriate housing, navigating government benefit programs, and ongoing employment? You’d be even better equipped to help your clients and their family members connect the financial dots and help make their money last.

And that could be a legacy-changing transition for your firm, as well as for your customers.
 

3 Robo-advice is primed for growth (but so is the direct advice of an expert)

What is it that drove a 23% jump in robo-advisor use from 2020 to 2021—and could lead to another double-digit increase this year?² Part it could be speed, part of it convenience.

However, even if digital investing continues to grow, there remains ample room for broad-based financial advice directly from professionals.

As part of our annual financial stress survey, we polled workers of all ages about where they turn for financial advice. Given factors such as inflation, market volatility, and the lingering pandemic, it should come as no surprise that a full 36% of employees were working with financial professionals as of 2021, up from 25% two years earlier. This percentage peaks at 43% for those over 50. 

As for whether people are more invested in robo-advice or a professional’s advice, the answer is both. When asked which style of guidance they planned to turn to in the future considering the effects that COVID-19 had on their lifestyle, 15% of well-off investors said they’d use automated online services more often, but 22% said they’d consult more frequently with financial advisors.

Given the mindset of today’s investors, some type of hybrid approach might be in your firm’s future. What’s your idea for increasing the synergy between robo-advice and the highly valuable planning experience you bring to the table?

For every investor trend, there’s an opportunity for financial planning professionals

A need for more holistic financial help. Longer lifespans and retirements. The continued emergence of robo-advice and a corresponding desire for a financial professional’s insight. While these factors might challenge older and narrower financial advisor models, they also both expand the potential market for your firm’s services and open the door for profitable new ideas.

So lean into the changes under way and throw some ideas around with your trusted partners and clients. Your advice can be more valuable than ever with an updated value proposition, solid partnerships, and a little creative packaging.    

1 U.S. Life Expectancy 1950–2022, United Nations: World Population Prospects. 2 “Young Investors Drove Use of Robo-Advisors During Pandemic,” Insider Intelligence Newsroom, June 2021.