7 reasons the evolving wealth management industry is beneficial for investors

Image1The landscape of financial advisory and wealth management services has evolved significantly in recent years, offering investors a host of compelling advantages.

In this article, we’ll explore seven key reasons why the current financial advisor sector is notably advantageous for those seeking professional guidance in managing their finances. From lower costs and fees to more transparency, the shifts in the advisory field have reshaped the way investors interact with their financial advisors.

1. The advisory sector has shifted from prioritizing sales to building client relationships

As independent financial advisors become more common, a fresh financial advisory model emerges, placing the client at the forefront and altering the way in which advisors structure their fees. When searching for the right financial advisor, clients now have the ability to choose a fee structure that suits their preferences. Some options include — but are not limited to — hourly fees, flat fees, subscription models, or assets under management (AUM) fees.

2. Regulations ensure that advisors must act in each client’s best interest

Regulatory guidelines require registered investment advisors to prioritize each client’s best interests, establishing a heightened standard for client service. Investors can further ensure this by only working with licensed fiduciary advisors. Fiduciary advisors are legally required to make choices that benefit your personal financial goals, and they can't let their interests get in the way of yours, so you can rely on their advice and recommendations.

3. Emerging technologies and research tools allow clients to better understand their financial plans with more transparency

Thanks to cutting-edge research, powerful analytical tools, and even financial calculators, advisors provide clients with a more sophisticated perspective on the potential results linked to various investment and personal budgeting methods. Utilizing these types of tools allows for more transparency between an advisor and their clients. Modern-day apps and tools also allow an individual’s personal finance journey to be more collaborative and easier to understand.

4. Financial advisors work in partnership with other skilled professionals to benefit their clients

Financial advisors play a central role in coordinating the services of accountants, lawyers, investment managers, insurance providers, and other third-party professionals to assist clients in managing different aspects of their wealth. Through a financial advisor’s network, clients have more opportunities to work with experienced professionals who are fit for their unique situation — whether they need tax advice for their small business, organizing their estate, going through a divorce, and more.

5. Advisors can craft cost-effective, diversified portfolios for individual investors

Working with an advisor rather than trying to map out your portfolio on your own is advantageous for several reasons. First, advisors have expertise and access to research that can help you make informed investment decisions. They can tailor your portfolio to your specific financial goals, risk tolerance, and time horizon, ensuring it aligns with your needs. Moreover, advisors can help you navigate the complexities of the financial markets and rebalance your portfolio when necessary. Doing so may alleviate the most common investment fears an inexperienced investor might have. Plus, their experience can potentially lead to better investment outcomes and lower costs, making it a more efficient and less stressful option compared to attempting it on your own, especially if you lack the time or knowledge to manage your investments effectively.

6. Digital technologies revolutionize how advisors engage with clients, potential clients, and the global community

Now that everything can be accessed from the palm of your hand through smartphones and apps, advisors have the ability to reach out to the global community more effectively. This can extend the advisor's impact as a publisher, educator, and coach. Financial advisors can be based in one side of the country — for example, New York — and easily work with a client from California. So, if you’re an individual seeking financial advice and unhappy with your local options, don’t be afraid to expand your horizons and take advantage of meeting an advisor virtually!

7. Advisors have more opportunities to become part of professional networks where they exchange best practices that can be advantageous for their clients

Within these communities, advisors gain access to investment education, quantitative resources, and chances for professional networking. This empowers them to develop and oversee their practices while enhancing the client's overall experience.

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Written byDimensional Fund AdvisorsContributing writer

Dimensional is a recognized global investment advisory firm that positions itself as a bridge between profound academic financial research and practical investment solutions.