Advisors Expect Steady Growth Amid AI Advancements, Market Volatility
Financial advisors weighed the future of business growth in a new survey from Natixis Investment Managers, as market volatility and tech advancements dominate the retirement plan industry.
Findings from Natixis research shows that while financial advisors saw a 12.5% growth in AUM, their average 12-month outlook declined to 10.7% as 64% see more clients wanting to keep cash at hand due to ongoing economic uncertainty. Other common responses from clients include trying to time the market (62%) and holding unrealistic return expectations (53%), say advisors.
Respondents don’t expect the market environment to have a negative long-term impact to business expansion. In fact, advisors anticipate growth to rebound by 11.2% over the next three years, as more firms adopt AI technology to streamline workflows.
“The immediate priority is helping clients protect portfolios and make sound decisions in a volatile environment,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight. “The longer-term imperative is to adapt their businesses for a market where AI-powered tools, next-generation investors, and evolving client expectations redefine the competitive landscape. The confidence we see from advisors suggests they recognize the challenge but also see a clear path to growth.”
Rather than see generative AI tools as competition, Natixis’ research shows that only 7% of advisors currently list tools for self-directed investors, including generative AI, as their biggest competition. However, this could change, as 35% expect self-directed tools to become their main growth obstacle in five years.
Still, advisors don’t necessarily think AI will outright replace them in the future, especially as participants speak on the value of human guidance. Almost all (91%) are focusing on personal relationships and accountability when speaking to clients about AI, and only 12% believe the technology will ultimately replace them.
Instead, advisors want to leverage AI practices to scale their business. Sixty-six percent believe AI can push market growth over the next two decades, while 70% say it carves out time for them to speak with clients. Over three-quarters (76%) add that professionals who utilize AI have a competitive advantage over other businesses.
Other advisors are adapting their services and capabilities to show their value to clients, as wealth transfers bring in a new set of clientele. Seventy-four percent are offering specialized planning services for younger clients, like digital tools, AI, and social media, and adding younger advisors to their teams.
“Advisors are not standing still,” said Marina Gross, head of Natixis Investment Managers Solutions. “They are evolving their businesses to compete in a world where clients have more tools, more information and higher expectations for personalization. As advisors work to retain next-generation relationships and demonstrate value beyond asset allocation, customized portfolio construction is becoming more important.
Natixis’ survey fielded responses from 300 U.S. financial advisors, as part of a larger global survey included 2,950 financial professionals in 23 countries. U.S. respondents reported a median AUM of $218 million and an average AUM of $5.7 billion.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.