Looking Back – Trends In The Advisor Industry In 2021

As 2021 comes to a close, we wanted to take a moment to reflect back on the year and how it has impacted the financial advisor industry. Despite a continued pandemic, supply chain woes, and rising inflation, advisors not only survived but thrived and emerged as a trusted and valued resource for clients. Advisors also proved to be an extremely adaptable group, quickly adjusting to meet the needs of clients and staff amid rapidly changing conditions. Across the industry we saw a few key trends emerge.

Labor shortages plagued many industries throughout the year. While many sectors of the economy struggled to maintain and hire staff, financial advisors were able to both keep staff and hire new team members. While early retirement and pandemic fears lead many to leave the labor market altogether, those who remained suddenly found themselves with the leverage and choice to move to new jobs and new sectors. Better pay and benefits, on-the-job training, flexible work conditions, positive culture, and career growth opportunities all helped position financial advisor firms as attractive employers for those still engaged in the workforce. We see many advisors committing to a sustained focus on culture, professional development, flexwork, and employee benefits in the new year, which will ensure that they remain an employer of choice as the labor shortage continues.

As the pandemic stretched into 2021, advisors continued to provide clients with education, insights, and tools to weather the fluctuating markets. Additionally, advisors helped many clients who were nearing retirement or facing job changes evaluate their options and manage their transitions. Confidence in financial advisors rose as did the demand for financial advice. All in all, it has helped elevate financial advisors as critical and trusted guides for clients in all stages of life.

At the beginning of the pandemic, lockdowns and limited access to vaccines forced advisors to shift to a virtual workspace. As childcare challenges and labor shortages linger, the need for flexible and remote work options continues. Many are finding that remote and flexwork options have improved satisfaction and productivity and given many a better work-life balance as they spend less time commuting and more time doing the things that matter. In person workspaces aren’t going away, however, and advisors will need to continue to balance between face-to-face and remote work arrangements in the new year.

Staff aren’t the only ones enjoying the shift to virtual meetings. The ability to meet remotely appeals to clients as well, especially as they too are facing challenges with childcare, exposure to new virus strains, and increased workloads due to labor shortages. Clients have also come to expect digital tools that allow them to manage and view their finances anywhere, any time. Prior to the pandemic, advisors had resisted technology. The pandemic left many with no choice but to adapt and implement not only client facing tools, but also technology for managing all aspects of their practice. As we look toward the new year, firms that continue to put technology at the center of their strategy and ensure complete adoption across all team members will outperform those who do not.

2020 was a record-breaking year for advisor M&A. That flurry of activity carried into 2021, sustained by the pandemic, the threat of rising taxes, and increased access to capital for buyers. Pressures to adopt new technology and the uncertainty of the pandemic led many advisors to choose retirement, but the industry didn’t see the predicted wave of aging advisors selling out. The industry is still dominated by a “greying” demographic that are choosing to work later in life. Sell and stay options are rising as a compromise, allowing sellers to cash out while practice value is high but still working until they are truly ready to retire for good.

All in all, 2021 proved to be a banner year for financial advisors. The industry demonstrated that it was not only adaptable, but that it would excel in the face of extreme challenges and uncertainty. As the pandemic hopefully begins to wane and the economy stabilizes, we believe advisors will continue to thrive in the coming year, serving as an invaluable resource for clients and a viable career path for many.

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