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5 Wealth Management Industry Trends to Watch in 2020

Trends can shift monthly, sometimes almost daily, especially in the current environment. Farm Bureau keeps its advisors in the know about changes in the wealth management industry by providing access to resources that offer current financial news and information. Here are just a few of the industry trends asset managers should expect to roll out in 2020.

1. Offering Socially Responsible Options

A greater number of investors are concerned about the social impact of their investments. To ease their concerns, these investors are removing investments that don’t align with their ethical values and choosing investments that do. Coined “socially responsible investing”, assets using socially responsible strategies grew 38% between 2016 and 2018, according to a report by US SIF. By offering socially responsible investment options, your business can meet the needs of the growing number of people seeking ethical investments.

2. Understanding Tax Impacts

Today’s wealth management advisor doesn’t need to double as an accountant, but being tax aware in an environment with lower returns is crucial. To create tax-optimized strategies for your clients, look to understand sources of returns, review related investment vehicles, focus on asset allocation between taxable and tax-deferred accounts, and compare estimated after-tax returns of potential investment opportunities.

3. Investing in Digital Connections

Clients, especially younger generations, are increasingly seeking intuitive, digital experiences through which they navigate the world. Even clients who aren’t tech savvy can appreciate the flexibility technology offers. While face-to-face interactions with your clients are important and help foster a relationship, offering ways to meet with clients remotely can help you connect with your clients in a meaningful way when circumstances don’t allow for in-person meetings. Try video platforms like Zoom, Skype or Microsoft Teams to meet your clients where they are — wherever that may be.  

4. Planning for the Transfer of Wealth

It’s estimated that Baby Boomers will pass on approximately $68.4 trillion to their heirs over the next 25 years, according to Cerulli Associates. But most heirs don’t keep their investments with the wealth manager who oversaw the investments. Now’s the time to start thinking through how your business could be impacted by transfers of wealth to heirs in coming years so you can develop strategies that help you maintain or acquire new business in the face of such changes.

5. Diversifying Strategies

As market gains favor passive strategies, it’s important moving forward to retain both active management and passive management. The trick to building a sustainable portfolio for your clients is to build a diversified portfolio that uses both active and passive strategies. Active and passive strategies help each other in diversifying a client’s risk, so it’s essential that advisors consider the expected market environment and how active strategies can mitigate portfolio risk.

Stay Ahead of the Curve

At Farm Bureau, you have the support and resources you need to stay ahead in an evolving industry. If you’re an experienced financial advisor and interested in joining Farm Bureau, let’s connect.