JERSEY CITY, N.J., Nov. 28, 2017 /PRNewswire/ — A new survey of financial professionals1 released by BNY Mellon’s Pershing today reveals that the financial services industry has yet to fully embrace initiatives that will make it relevant to the next generation of investors. Further, regulatory uncertainty may be overshadowing some of the longer-term challenges facing the industry.
According to the study, titled “Business Transformation: Navigating A Path Forward,” which was conducted for BNY Mellon’s Pershing by the research and advisory firm Aite Group, uncertainty in the political and regulatory landscape is cited as the main challenge to business by 71 percent of respondents, followed by the Department of Labor (DOL) Fiduciary Rule (67 percent), and an aging client base and difficulties in reaching young clients (65 percent).
The majority (68 percent) of financial professionals responding to the survey acknowledge that reaching new and untapped investor segments will be a key factor in driving growth and that developing a digital advisory platform would help them acquire Gen Y clients (62 percent). Yet, about a quarter (24 percent) of respondents are not considering leveraging a digital advisor platform. Further, only three percent are using a digital advisor platform and a mere two percent say their practice has made the decision to launch one.
“The findings largely reaffirm what we are seeing in the marketplace,” said Rob Cirrotti, Managing Director of Investment and Retirement Solutions at BNY Mellon’s Pershing. “Firms have spent a fair amount of time adapting to the changes in the regulatory environment. Now, it is time to move beyond the regulatory uncertainty. We must engage in a wider conversation about how technology and talent can create the scale and efficiencies needed to transform the business for the future.”
Additional key findings of the survey include:
The industry has adapted to the DOL Rule and accepted the fiduciary mindset. A majority (64 percent) of respondents who serve retail retirement accounts indicate that their firms have implemented the necessary process and documentation changes related to investment or rollover recommendations. Further, a significant number of respondents (43 percent) who service retail retirement accounts say they would like to see the fiduciary standard be kept alive—even as they would like to see the Rule revamped.
Regulatory changes have led to the re-evaluation of business practices and models. One main impact of regulatory change has been the accelerated move toward