Date: 1/19/2021
Source: Incapital
Author: Incapital



Impact of COVID-19 on Advisor Biz:

52% expected to serve more households in 2020 vs. 2019

50% waiting until 2nd half of 2021 or later to meet clients in person

96% are comfortable meeting with prospects virtually

60% considering permanent hybrid virtual/in-office work approach


BOCA RATON, FL – January 19, 2021 - According to the latest survey of 396 financial advisors released by Incapital LLC, a leading underwriter and distributor of fixed income securities and risk management investment solutions, the majority of financial advisors reported positive but modest expectations for equity market returns in 2021, with 49% saying equity markets will rise between 5% and 10%, and another 25% forecasting returns of 0% to 5% - all well below equity market returns from 2020.


More bullish, 16% of advisors expected 2021 equity returns up 10% to 15%, and 2% said they expected gains of up to 20% or more. Just 8% said they expected a down market in 2021.


These findings are from the fourth Incapital Pulse Survey conducted online between December 8 and December 14, 2020.


Corrections, Value Stocks and Rising Rates?


Though equity market return expectations for the year are moderate, volatility may still be an issue in 2021, as 87% of advisors said the possibility exists for multiple equity market corrections.


Other forecasts include:


  • The vast majority (93%) said value investing could continue its comeback.
  • More than half (57%) forecast rates on the 10-year Treasury to come in at 1% to 2%; 38% said between 0% and 1%; and 5% said above 2%


“Given the enormous amount of uncertainty and hardship from COVID-19 and other factors in 2020, it looks like advisors expect the equity market to slow down and catch its breath in 2021,” said Chris Mee, Managing Director, and Head of Wealth Management Solutions Distribution at Incapital. “If the possibility of multiple corrections comes true, it could be a year of more pain than gain in equities. In this type of environment, risk management is critical for investors to stay invested to capture whatever gains may come so they can stay on track to achieve their long-term goals.”


The Impact of COVID on Advisor Business: Revenue Flat or Up; More Households Served


Advisors held their own in 2020: 69% reported that their revenue in 2020 was on par with 2019; while 25% reported an increase in revenue for the year. Only 6% reported a drop in revenue for 2020.


Business picked up as a difficult year unfolded: Asked if they expected to serve more households in 2020, 38% said yes in June; by September that number had climbed to 47%, and by December it was more than half (52%). Of those that expected to serve more clients, 77% said they added six or more new households, including 47% who said they added ten or more.


Almost three-in-ten (29%) said they received more referrals in 2020 than in 2019, while 51% received about the same, and 20% received less.


Where did their new business come from in 2020?


  1. Referrals Without Asking (33%)
  2. Asking For Referrals From Clients & Strategic Alliances (23%)

  3. Email Campaigns (12%)

  4. Virtual Educational Seminars (10%)       

  5. LinkedIn Prospecting (7%)


Working Virtually vs. In-Office: A Change to Come?

Interestingly, 60% of advisors said they are planning to - or may consider - a permanent virtual/in-office hybrid arrangement for their teams moving forward.


More than half (55%) felt their teams were, or might be, more productive working from home, and they cited several benefits: working from home, 65% of advisors said they had time to increase communications with clients, with 49% spending time improving how they served clients.


Another 30% of advisors said they will be or are considering reducing the size of their office space, with 16% saying they may eliminate office space altogether.


Where they are working now: 42% of advisors said they returned to their offices by December of 2020; 34% expect to return to their office in the first half of 2021; 11% in the second half; and 13% don’t expect to return to their offices at all in 2021.


To make it all work, 58% of advisors said they reevaluated their compliance procedures with team members working from home.


Not Meeting Clients or Prospects in Person; Don’t Think it Matters Where They Work


Half of the advisors surveyed said they are waiting until the second half of 2021 or later to meet clients in person. 


Only 12% of advisors said they have in-person meetings with clients now; and 38% said they would in the first half of 2021.


Are they worried clients might disapprove that they are working virtually? Apparently not: 67% said they are not concerned about client/prospect reaction because they are working from home.


In terms of prospecting, the vast majority (96%) said they were comfortable meeting with prospects virtually; and 67% said prospecting and selling could be done effectively via virtual meetings. In fact, 45% of advisors said they had six or more virtual prospecting meetings in 2020 with a success rate of 22%.


“Working through the crisis is teaching us all a lot of lessons about how to serve clients,” Mr. Mee said. “Our focus first and foremost is on the safety of our clients and teams. As a result, the entire industry has adapted to new approaches and surroundings, and in this we are seeing opportunities to provide potentially greater service, more conveniently and effectively, to clients. While we are all eager to get back to normal, the client experience lessons we learn from this difficult time will change the way we work forever.”


About The Survey


The Pulse Survey sponsored by Incapital was conducted online via Qualtrics by Red Zone Marketing. A total of 396 financial professionals, including wealth managers, fiduciaries, financial planners and brokers from more than 50 broker-dealers and RIAs completed the survey between December 8 and December 14, 2020. Responses were from financial professionals residing in 42 states. Click here to obtain the survey report.