Like Australian advisers, their US counterparts are expanding their product offerings and allocations in order to mitigate uncertainty and better protect their client’s investments.
According to research conducted by US-based Cerulli Associates, American advisers are adopting exchange-traded funds (ETFs) and separate accounts as their preferred investment vehicle at a “rapid rate”.
Cerulli credits this to the vehicles’ “unmatched flexibility, transparency, and tax advantages”.
“By 2027, advisers expect their allocations to mutual funds to fall 4.2 percentage points, as ETF allocations are expected to increase 3.7 points over the same period,” Cerulli reported.
Cerulli’s research also shows more than half of US advisers (58 per cent) believe it is important to speak with a wholesaler before investing in an asset manager’s strategy, yet only 38 per cent find conversations with portfolio managers to be equally important.
“As investment patterns continue to evolve, advisers must delve deeply into new products to make informed, confident decisions that maximise client outcomes,” said Andrew Blake, associate director at Cerulli.
“By fostering strong relationships between wholesalers and product specialists, firms can effectively deliver services that help attract and retain assets, securing their position in a competitive market.”
However, despite this expanding variety and new services being on offer, high-net-worth investors in the US are still approaching advisers for more traditional services.
Cerulli research found advisers offer their clients an extensive range of financial services. Advisers across all channels offer an average of 6.1 of the 11 financial planning services Cerulli presented to survey respondents. Accumulation and retirement income remain the most popular services with clients.
Despite the range of services advisers offer, Cerulli found American retail investors focus on a select few services within their adviser relationships. Among the same 11 services, retail investors report using an average of just under three services with their current financial providers. While retirement-focused advice ranks highest among services used by clients, other services reveal a significant gap between the adviser-reported offerings and client-reported use.
One example is that while 67 per cent of advisers offer insurance services, just 17 per cent of retail investors rely on their primary provider for them. Tax planning is another example, with 47 per cent of advisers offering it, but only 14 per cent of retail investors utilising this service through their primary provider.
“It is very possible that advisers already offer these services within client portfolios as a core offering, but that they are not effectively being communicated to the client,” said John McKenna, research analyst at Cerulli.
