Changes In Investors’ Priorities Are Reshaping The Investment Advisors’ Business

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.


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”.


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.


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.