Changes in Investors’ Priorities are Reshaping the Investment Advisor’s Business

Changes in investor´s priorities

The asset and wealth management (AWM) industry continues to undergo a profound transformation. While competition, technological disruption, and new players continue to impact the industry, a more profound shift is the result of changes in investors´ priorities. Understanding the impact of these new priorities suggests a necessary adjustment in the way players in the AWM industry do business.  These industry dynamics are also affecting the registered investment advisor’s (RIAs) channel.  

With a change in demographics, we are seeing a generation that is more technologically savvy and has an increased interest in Environmental, Social and Governance (ESG) responsible investments. 

Let’s take a closer look at what these new investor priorities are and what actions RIAs can take to address these new priorities.

Changes in Investors´ Priorities

The PWC´s Asset and Wealth Management Revolution: Investors Perspectives report, concluded that the top priorities for investors by importance rated on a scale of 1-10 in North America are as follows:

  • Risk-return: 8.7
  • Macro-Economic and Political Environment 7.8
  • ESG: 6.6

These results suggest a major shift in investor sentiment. While risk-return, is ranked in the top three priorities for investors, it is important to note that other priorities have been displaced. For example, fees have historically ranked much higher in importance. According to PWC: “ESG has become a top priority for the industry in recent years. It ranks third in importance among investors surveyed.” 

The message is clear that these new priorities are of great value to investors. As such, RIAs must adjust their businesses to accommodate these new investor requirements. RIAs can improve their engagement with their clients by including ESG investment strategies. As a result, it is likely that their close and retention ratios can improve substantially.

It is important to point out that massive amounts of capital are being invested in ESG. Therefore, many companies that operate in that space might have substantial access to capital to fund their projects. This excess liquidity should positively affect their valuations. 

In a 2018 report, The Global Sustainable Investment Alliance states that “Total US-domiciled assets under management using sustainable strategies grew from $8.7 trillion at the start of 2016 to $12.0 trillion at the start of 2018, an increase of 38 percent. Of this, $11.6 trillion is held by asset management firms and community investment institutions applying ESG criteria in their investment analysis and portfolio selection”.

Three Ways for RIAs to Address Changes in their Clients´ Investment Priorities.

Investors’ priorities are reshaping the investment advisor industry. As a result, RIAs must look for alternatives that can help them deliver solutions to their clients’ needs. Therefore, offering investment strategies that take macro-economic, political and ESG criteria into consideration is necessary. But, how will boutique RIAs with limited resources be able to implement such changes?  Below are three ways for RIAs to address changes in their clients´ investment priorities:


Many reputable asset managers have interesting ESG models available for RIAs. Asset managers like Wisdom Tree and Nuveen have attractive ETFs and investment strategies with a focus on ESG. In addition, there are ESG-specialized wealth management companies like Gitterman, and some niche players like Inspire who focus exclusively on a segment of the ESG category. Investors and RIAs can have access to these types of models through a model marketplace like the one Let Bob offers.

Direct Indexing

Investors can use Direct Indexing to create their own ESG strategies.  For example, FTSE Russell has data models that provide investors with the necessary data to assess a company´s ESG risks.  By using automated trading technology to replicate an index, investors and RIAs can select or delete stocks that may or may not comply with their ESG criteria. The complexity of Direct Indexing can be eliminated by using automated trading technology like the one Let Bob provides.


Using automation technology can free up time for RIAs. This available time can be invested in understanding investors’ priorities better and in analyzing ESG model strategies that meet investors’ needs. The result is a balanced diversified portfolio that addresses investment themes important to investors.

The investment industry will continue to change. Black Swan events such as the COVID-19 pandemic will accelerate many of these changes. For the AWM industry and the RIA channel, these are challenging times that require bold moves and quick responses. Testing new investment alternatives and using automation are critical for facing these new industry challenges.

PWC summarizes the current investor sentiment: “… investors expect more than most AWM businesses are currently offering. And without urgent attention, the gap between expectations and satisfaction will get wider and wider. The bull market of recent years has made it hard to dissect performance, with firms racing to the bottom on cost and fees. But AWM firms will have an opportunity to distinguish themselves in the difficult environment ahead if they embrace a transformation that focuses on redefining their purpose and strengthening their capabilities to better align with investors´ priorities.”

The RIA channel is exposed to the same challenges. However, addressing them in a timely manner should provide opportunities to compete in a changing industry environment.

Three Key Ways to Navigate a Volatile Stock Market Using Automation

Investing during a Volatile Market

This spring has been a roller coaster for investors due to volatility and an unexpected pandemic. So, how do investors weather through in an uncertain and volatile stock market? We summarize three reasons why using “smart” automated technology can help you navigate the constant fluctuations of a volatile stock market.

Expert Advice

Registered Investment Advisors (RIA), wealth managers and family offices are always looking for ways to provide their clients with better investment strategies, particularly in a volatile stock market. For the past few years, the markets had been doing well and many investors were having great results. However, in March 2020, many portfolios plummeted and volatility became the norm. As always, in times like these, well-diversified tactical portfolios are crucial.

Many RIAs use their proprietary models to manage their clients’ assets. But as we all know, assets are diverse and specific expertise in investment strategies are critical to making sound recommendations. An investment professional can be great at income-generating strategies, while another is great at crafting growth-investment strategies. For the investor, the best investment strategy would be a combination of best-in-class investment strategies crafted by experts in their respective areas of competencies.  Fortunately, there are many expert asset managers who provide best-in-class models for investors.  Combining different best-in-class models from one or several expert asset managers is critical to having a diversified investment portfolio.

Strategic Discipline

Navigating volatile stock markets can be daunting. And, many investors overreact to market fluctuations, often falling prey to panic. Investors without a set investment strategy might trade their assets at the wrong time because they are guided by emotion. That’s why having a sound investment strategy and being disciplined are critical.

As such, sticking to a set investment strategy helps investors make the appropriate decisions at the right time. RIAs and some technology tools can help investors use investment strategies that are consistent with the financial goals of investors.  This approach may have helped during the market downturn this spring.

Appropriate Asset Allocation

A set investment strategy is goal-oriented, so it needs to be carefully monitored so that the set goals are achieved.  Although volatility will affect your strategy, rebalancing will help you keep it on track. Many of those who had a strategic approach were able to rebalance their portfolios before the spring market crash. As a result, well-diversified investors suffered limited losses.

Models from asset managers and a disciplined approach crafted by RIAs helped investors realize gains and minimize losses. Investors who saw growth in stocks throughout the market rally most likely sold equities and bought fixed income to bring their portfolios back to their target asset allocation. For many, the result was selling at the right time before the market crash.

A volatile stock market brings additional risk, that will require RIAs to monitor more frequently potential changes in allocation.

So, what really does all this mean for “smart” automated technology?

All of the above sounds great, but when does one have time to do all of this?  For the investor, balancing a job, family life and investing is no easy task. For RIAs, dealing with multiple strategies from different clients can be time-consuming and prone to error.  Therefore, using “smart” technology to automate expert advice, strategic discipline, dynamic rebalancing and trading is a solution to navigating a volatile stock market.

Keep in mind, not all technology is equal.  Technology has advanced substantially in the last few years and disrupting technologies such as IoT, machine learning and AI are changing entire industries. RIAs and investors who are using these types of technologies will have an edge when navigating a volatile stock market.

Whether investors are managing their own portfolios or using a RIA, technology is becoming a critical component for success. Technology can help RIAs make sure that their clients’ portfolios are on track and up-to-date and can help their clients with the following critical aspects of managing their portfolios:

  • Rebalancing
  • On-time trading
  • Dollar cost averaging
  • Tax harvesting

In addition to these considerations, technology can also help RIAs assess in a more efficient manner best-in-class investment strategies from professional asset managers. 

It’s time to explore how “smart” automated technology can help you better manage your portfolios and navigate uncertain and volatile markets.