The year 2020 has been all about resilience. While advisors know to expect levels of volatility within the market, the ways in which we conduct our businesses have remained relatively stable over the past 15 years.

Ready or not, the financial industry is shifting towards consolidation. This massive downscale calls for a reevaluation of the tools and resources financial planners use to grow client relationships amid widespread turbulence and uncertainty.

The advisors best prepared to guide clients through these changes will take into consideration the following trends that will drive their practices in 2021:

A balanced administration can help stabilize the economy

A COVID-19 vaccine is on the horizon, but it will not lead to an instantaneous return to “normal” life. The economic ramifications of this pandemic will last a long time – massive shutdowns and unemployment will continue to cause consumer spending to decrease and provide a tangible motivation to increase personal savings accounts.

Government intervention has helped the US economy in the short-term, but an economy falsely propped up with low-interest rates, stimulus checks, and eviction bans is like rebuilding a house on sand. Eventually, it will topple over. Americans will inevitably pay it all back.

Having a balanced administration and an experienced Treasury Secretary respected on both sides of the political aisles will prevent the economy from nosediving even further. The Fed will continue to pull levers and strings to keep rates low and as stable as possible. As such, financial advisors will prepare clients by recommending investments in growing sectors such as healthcare and biotech who have proven to be the most valuable players during this time.

Clients will remain on high alert and seek on-demand services

It is safe to say that consumers who have recovered from the immediate effects of the pandemic remain confident in their financial futures. They are less concerned with small market fluctuations and are looking at their investment strategies long-term. After seeing markets tumble earlier this year, it’s no surprise that consumers are on high alert and demanding new services from financial advisors.

As a result, financial planners are adding retainer-based services to attract younger investors and providing additional resources to support clients during unexpected challenges. There is high demand for subscription-based financial services now more than ever as we’ve seen with the rise of Robinhood and Acorn this year. Financial planners would be wise to add a subscription-based model and additional offerings and resources in 2021.

Advisors need to adapt to Millennials and younger demographics as their needs and financial circumstances evolve. These could very well be clients for the next twenty years!

Old school firms will be forced to go digital

In 2020, in-person meetings and physical contact became taboo, and it’s unlikely we’ll return to in-person interactions in the first half of the new year. Even with the promise of a vaccine, experts agree that masks and social distancing practices will remain a part of life at least until there is significant widespread immunity. This has forced the financial services industry to rethink how they engage and build relationships with clients.

With a new year ahead, financial firms are exploring technology solutions that will improve client engagement and integrate those costs into their annual budget. This goes beyond video conferencing solutions to include digital document scanning, tighter security protocols, and digital marketing. Financial services firms need to prioritize seamless touchpoints, communication, and resources for their clients in 2021 and beyond.

For example, advisors will increasingly seek tools that integrate into their broader client relationship management systems next year. Advancements in AI and automation will allow for more customized experiences to serve individual client needs without sacrificing time – a valuable and rare resource for a growing independent practice.

Despite the current state of the world, 2020 has brought to light the incredible ability of investors and organizations to adapt. Advisors are actively seeking new ways to keep clients engaged and for those who go the extra mile to make the transition easy for clients, the effort is starting to pay off.

Is your independent firm ready for 2021? Financial Advocates has a multitude of resources to ensure that you are best prepared to forge ahead in the new year.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.