Advising in the Year 2025

The new 2025 Prediction Survey compiles the forward-looking practice management expectations of some 175 career advisers, drawn from across the SEI Advisor Network.

Ten years from today, this group of financial advisers expects to spend most of their time “cultivating existing client relationships via in-person meetings,” a state of affairs anticipated by nearly six in 10 advisers. A sizable minority (32%) expects the primary path of client communication to be video conferencing by 2025, while email, social media and events capture the last 10% of advisers.

From a prospecting standpoint, SEI finds more than half (58%) of the respondents expect referrals “to remain the number one business generation tool in the year 2025,” while 19% expect the same centers of influence that are important today (such as ERISA attorneys, accountants and actuaries) will continue to be useful.

“With regard to social media, 16% of advisers surveyed believe that it will be an important tool for new business generation 10 years from now,” SEI explains. Despite this, a small percentage (3%) “does not think it is the ideal tool to cultivate relationships.” Likewise, a similarly small percentage of advisers predicts that networking events and direct marketing will fall by the wayside as powerful prospecting tools.  

SEI also asked these advisers to explain their expectations for automated portfolio management technologies, finding certain aspects of portfolio management are likely to be automated for smaller portfolios while larger clients will demand hands-one service. Overall, “financial planning and the decisions related to it are far more complicated today for larger portfolios, and will continue to be so 10 years down the road,” SEI says.

Wayne Withrow, executive vice president, SEI Advisor Network, feels the survey clearly demonstrates the ongoing necessity of a human-centric approach to advising. “However, due to the changing needs of tech-savvy and time-constrained investors, financial advisers need to use technology to improve productivity and free up time to spend with clients,” he warns. “Becoming a techno-adviser will be critical to better servicing clients in the future.” (See “Why You Can’t Ignore New Adviser Tech.”)

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When asked about the biggest differentiator for their firms in 2025, SEI says an “overwhelming” majority (92%) point to “planning approach and relationships,” followed in a far-distant second place by “investment approach” (5%) and technology (2%). With regard to investment product offerings, respondents suspect that tax-managed investing (29%), goals-based investing (20%), and index investing will gain the most momentum through 2025.

“Tactical/dynamic investing, ETFs, and socially-responsible investing will have less momentum according to the advisers surveyed,” SEI says. “As tax codes continue to change and take a large bite out of investors’ gains, it is not surprising that tax-managed investing is expected to gain momentum 10 years from today.”

Of the technologies presented to the survey participants, 38% predicted “business efficiency tools” will have the biggest impact on their practice in terms of winning new clients in 2025, while nearly a quarter selected front-office tools, such as client relationship management (CRM) technology. Other tools that are expected to have a big impact are “digital marketing, robo-planning tools, being virtually available to clients 24/7, and social media, such as Twitter, LinkedIn and Facebook.”

While advisers anticipate having new tools to help their businesses grow in 2025, certain obstacles will remain. For example, nearly half of advisers rated “legal and compliance regulations” among the biggest obstacles for growth, with recruiting talent, growth of “do-it-yourself” investing, and attracting the Millennial market rounding out the list. When asked if they will include a robo-adviser component as part of their offerings, SEI says “more than half of the respondents predict that 31% to 80% of advisers will offer some type of robo-advising services by 2025.”

More information on this and other SEI research is at www.seic.com/advisors.