AI, Marketing, and Goal-Based Planning:
4 Industry Trends for New (and Veteran) Financial Advisors

Marketing is an unappreciated lever that financial advisors can pull to gain a competitive advantage.

In our survey, advisors ranked marketing as one of the two areas where they’re spending the least time, even if they’re new to the business.

Advisors who are in their first five years are still building their book of business. As a result, their focus is developing relationships with prospects, and they lean heavily on the home office for portfolio strategy and due diligence. Despite this, new advisors indicate that they’re spending the least amount of time overall in marketing.

For some, it may be a budget issue, or perhaps they feel the marketing resources provided by their home office are sufficient. However, given the competitive landscape, advisors who are outsourcing their marketing efforts to the home office should invest in understanding whether the home office is meeting their needs.

Advisors indicate that marketing is one of the two areas where they’re spending the least time, even if they’re new to the business.

Regardless of experience level, advisors can gain traction by investing in marketing. We defined marketing as “various strategies and activities employed to promote services, build your brand, attract potential clients, as well as deepen relationships with existing clients through traditional or digital channels.” While this can include traditional activities such as networking and establishing relationships with COIs (Centers of Influence) who provide referrals, these activities are time intensive. Investing in digital or dollar-based marketing channels is an opportunity to test and learn what brings in new clients at scale with greater efficiency.

According to Kitces’ Research Study On Advisor Marketing, advisors can look at client acquisition cost (CAC) to measure the effectiveness of their marketing strategies. While activities such as COIs and networking are far more popular, from a CAC perspective, activities such as SEO and paid web listings are far more profitable.

Another way advisors can invest in digital marketing channels is by building their personal brand through an active social media presence. According to Putnam Investments’ Social Advisor Study, “During the COVID-19 pandemic, 74% of U.S. financial advisors who used social media for business initiated new relationships or onboarded new clients.”

Tactics and channels aside, successful marketing relies on understanding today’s investors – their preferences, needs, and trends. Advisors can educate themselves about evolving investor trends, then take advantage of digital marketing channels to efficiently reach future clients.

Seasoned and veteran advisors can learn from the new advisor’s holistic service, data-driven approach, and openness to AI.

Our survey indicates that new advisors have several strengths. For example, they offer more services – including retirement planning, tax planning, and real estate planning – than seasoned and veteran advisors.

New advisors are offering a greater number of services than their more experienced counterparts.

Not only that, but they are also planning to continue increasing their services further, on par with the veterans in the business. Our survey also shows that client adoption is there, suggesting that the holistic service that new advisors provide can be a competitive advantage for them.

New advisors also leverage more data-driven approaches to asset allocation, compared to their more experienced peers. Our survey showed that they consider factors such as fundamental analysis and risk modeling significantly more than seasoned or veteran advisors.

We interviewed 758 investors in 2022, and one conclusion was that focusing on risk modeling can also be an advantage for advisors interested in attracting investors who are currently leveraging online resources rather than partnering with financial professionals. Advisors who integrate risk modeling capabilities into their practice may make significant headway in winning the trust of this group of potential clients.

Another modern trend that new advisors are adopting is the use of AI. Though artificial intelligence was not broadly used by the advisors in this study, new advisors used AI (ChatGPT, BloombergGPT, Finchat.io, Mo from Morningstar, and IndexGPT) more often than their experienced counterparts.

According to Kitces, AI can “help [advisors] increase their productivity by streamlining more of the middle and back office tasks and processes.” AI use cases for advisors include scaling client communications, crafting emails related to pressing topics, note-taking, and summarizing lengthy texts.

As investor preferences and expectations change, seasoned and experienced advisors must adjust accordingly to keep pace, and to stay competitive during wealth transfers. Providing multiple services, demonstrating their data-driven approach, and adopting new technologies may help them increase their wallet share and attract new clients.

As advisors gain experience, they look for support outside the home office – the right technology partner is key.

As their practices mature, there’s a shift in who advisors look to for support. New advisors rely on the home office, but as advisors gain experience, they start looking for help elsewhere. Part of this shift is that seasoned or veteran advisors are more likely to deviate from home office recommendations. But across the board, as advisors gain experience, they become interested in expanding to more specialized or tailored resources coming from asset managers, specialists, and software providers.

As advisors gain experience, they look for support in different areas, and from sources outside the home office.

Veteran advisors have an existing book of business, so they are often trying to get a larger wallet share from their clients. Some high-net-worth clients use multiple advisors and most tend to need more sophisticated portfolios, so the right technology partner can help advisors differentiate themselves from the competition. Software providers can give advisors the holistic view they need for better recommendation across asset classes and investment vehicles.

Another aspect to consider is generational wealth transfer. The turnover rate of advisors during generational wealth transfer is 70%. Adopting technology that supports personalization at scale can help veteran advisors retain clients and engage with prospects.

Advisors of all experience levels share the same goal: serving their clients. But financial innovation, digital connectivity, and market access are reshaping the landscape of investment opportunities and financial planning. Build a modern advisory practice with Morningstar’s insights and solutions for the Evolving Investor.