Advisors hustled to hang onto clients last year: Fidelity

investmentnews.com:

With the market dropping precipitously in 2022, registered investment advisors spent much of last year fighting to hold onto clients and soothe their anxieties.

The S&P 500 stock index posted a total return last year of of negative 18% last year, eroding the annual organic growth of client assets both at RIAs with less than $1 billion in client assets and their larger counterparts, or those with $1 billion or more in assets under management, according to a new report, the 2023 Fidelity RIA Benchmarking Study.

With the stock market falling in 2022, financial advisors were also busy trying to please clients by adding on services, according to RIA executives.

“We saw advisors focus specifically on retaining clients in 2022, likely a result of more reactive engagements that were driven by market volatility,” Anand Sekhar, vice president of practice management and consulting at Fidelity Institutional, the RIA custody arm of Fidelity Investments, wrote in an email.

According to the report, RIAs with less than $1 billion in AUM posted organic growth rates of 3.2% last year compared to 8.2% in 2021. Likewise, the larger RIAs with $1 billion or more reported organic growth of 3.6% last year versus 8.4% a year earlier.

“So, rather than engaging with clients on topics and goals that might be considered higher value and lead to share of wallet gains — holistic financial planning, family engagement and generational wealth transfer, etc. — advisors instead spent time protecting their core client base and helping clients understand the state of the market,” Sekhar said.

Financial advisors and RIAs have said for years they intend to hire and train staff, but that may be easier said than done in such a competitive environment.

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