Greatest Regulatory Impact in 2010: Fees

After fees, financial firms said the greatest regulatory impact will be a universal fiduciary standard for financial advisers (23%) and the Pension Protection Act (16%).

Cerulli conducted an end-of-the-year reader survey, with respondents comprising mostly product providers (75%), but also including broker/dealer firms (11%) and other technology providers (9%).

Now that market volatility has ironed out, the biggest business challenges facing surveyed financial firms have shifted. The surveyed firms cited client acquisition/retention as the greatest business challenge in the coming year (35%, compared to only 14% in 2009), followed by insufficient resources (21%). Last year, the biggest challenges were the economic downturn (27%) and volatile markets (25%).

The overwhelming majority of respondents expect the market to rise in 2010—but are split on what they plan to do with that expectation. The largest number of firms (43%) expect the market to rise, but will not build strategy on anticipated market action. Almost as many (39%) expect the market to rise and are building their firm’s strategy accordingly.

As far as products go, open-end mutual funds will be the primary product focus in 2010 for 87% of respondents, followed by managed accounts (63%), insurance products (28%), collective investment trusts (CITs) (19%), and exchange-traded funds (ETFs) (15%). Although passive investing and low-cost vehicles such as ETFs are attracting substantial assets, the mutual fund is still the dominant investment vehicle, Cerull notes.