Goodbye 2018, Hello 2019

At Optima Group, it feels like the year raced by at breakneck speed. We hope everyone has an opportunity to relax and spend time with family and friends over the holiday season, and we wish you the best in 2019. We’d like to express our continued appreciation and gratitude for the relationships we have with our clients and colleagues and look forward to continuing to work together in the coming year.

As we look to the year ahead, we have been thinking about what key themes for 2019 and beyond might be important for wealth and asset management. Based on questions we have been asked, developments we see in the industry and our own research, here are some trends and thoughts we’d like to share:

○  Increased use of social media for wealth and asset managers

○  Communication is critical with volatile markets potentially ahead

○  Focus on advisor added value

○  Continued deal flow and consolidation among wealth RIAs

Social media – it’s not just for retail anymore

In a highly regulated industry, wealth and asset managers have been slow to embrace social media, often using it primarily as a recruiting tool. In the last few years, this has changed and more firms are recognizing the importance of social media as part of an integrated marketing plan to help in the sales process and as part of ongoing client communications. According to a survey of advisors by Putnam Investments, The Social Advisor 5.0, in 2017, 86% of advisors reported social media activity helped them win clients and 88% said social media has changed their relationship with their clients. A 2016 study by PwC indicates that institutional asset managers are moving in the same direction. For both individual and institutional, social media is becoming an integral part of a comprehensive marketing plan.

When times are tough, don’t “ghost” your clients

The term ghosting is defined by Oxford Dictionary online as “The practice of ending a personal relationship with someone by suddenly and without explanation withdrawing from all communications.” During the financial crisis, many financial firms, with nothing positive to say, ceased communications with their clients to the detriment of relationships. We urge firms to remember that when the going gets tough, this is precisely when your clients most want to hear from you and know that you are keeping a close eye on the markets and their money.

For everything you do      

Similarly, with markets flat or down, now is the perfect time to remind clients of the value you add and how that also translates into dollars saved or gained. This includes tax guidance, wealth planning, understanding what your client is trying to accomplish and constructing a portfolio designed to help them achieve their goals, disciplined rebalancing and helping them avoid potentially costly and reactive moves that can detract from performance. The value of this advice can be substantial, according to “Putting a value on your value: Quantifying Vanguard Advisor’s Alpha.”

Let’s make a deal

2018 looks set to be a banner year for wealth management deals, with a forecast of 183 total deals for all of 2018, according to Q3 2018 data from Echelon Partners, driven largely by interest from consolidators and private equity investors leading to continued breakaway activity. This marks the sixth straight record year, and the same drivers are expected to continue to be in play in 2019. Many RIAs seek to realize liquidity and put a business succession plan in place given the late stage of the economic cycle, although rising interest rates could slow deals down as financing costs increase.