November 28, 2017
Nearly Three Quarters of Financial Professionals View Political and Regulatory Uncertainty as the Main Challenge to Business
JERSEY CITY, N.J.— A new survey of financial professionals1 released by BNY Mellon’s Pershing today reveals that the financial services industry has yet to fully embrace initiatives that will make it relevant to the next generation of investors. Further, regulatory uncertainty may be overshadowing some of the longer-term challenges facing the industry.
According to the study, titled “Business Transformation: Navigating A Path Forward,” which was conducted for BNY Mellon’s Pershing by the research and advisory firm Aite Group, uncertainty in the political and regulatory landscape is cited as the main challenge to business by 71 percent of respondents, followed by the Department of Labor (DOL) Fiduciary Rule (67 percent), and an aging client base and difficulties in reaching young clients (65 percent).
The majority (68 percent) of financial professionals responding to the survey acknowledge that reaching new and untapped investor segments will be a key factor in driving growth and that developing a digital advisory platform would help them acquire Gen Y clients (62 percent). Yet, about a quarter (24 percent) of respondents are not considering leveraging a digital advisory platform. Further, only three percent are using a digital advisor platform and a mere two percent say their practice has made the decision to launch one.
“The findings largely reaffirm what we are seeing in the marketplace,” said Rob Cirrotti, Managing Director of Investment and Retirement Solutions at BNY Mellon’s Pershing. “Firms have spent a fair amount of time adapting to the changes in the regulatory environment. Now, it is time to move beyond the regulatory uncertainty. We must engage in a wider conversation about how technology and talent can create the scale and efficiencies needed to transform the business for the future.”
Additional key findings of the survey include:
The industry has adapted to the DOL Rule and accepted the fiduciary mindset. A majority (64 percent) of respondents who serve retail retirement accounts indicate that their firms have implemented the necessary process and documentation changes related to investment or rollover recommendations. Further, a significant number of respondents (43 percent) who service retail retirement accounts say they would like to see the fiduciary standard be kept alive—even as they would like to see the Rule revamped.
Regulatory changes have led to the re-evaluation of business practices and models. One main impact of regulatory change has been the accelerated move toward advisory, according to 35 percent of respondents, followed by the creation of governance and oversight models (33 percent).
Financial professionals do not see the DOL Rule making a major impact on product choices. More than half the respondents (55 percent) who service retail retirement accounts indicate that there will be no change to their product selection for retirement accounts if the DOL Rule gets implemented in its current version. Meanwhile, about nearly one quarter (24 percent) indicate that there will be an increase in product selection and about a fifth (21 percent) say there will be a decrease if the Rule is implemented in its current form.
Financial professionals are mostly all talk when it comes to digital technologies. Almost three quarters (71 percent) of respondents say they are interested in leveraging a new digital advisor platform over the next two to five years. Further, more than half (53 percent) of business owners or financial advisors involved in strategic decision making at their firms indicate that speeding up the implementation of new technologies is a high priority for their firm. That said, only three percent of all respondents say they are using a digital advisor platform and only two percent say they have made the decision to implement one.
The importance of talent in driving growth is overlooked. Only 15 percent of all financial professionals responding to the survey say investing in strategic talent acquisition and development to increase capacity is a major factor in driving growth. Meanwhile, 38 percent say it is either not a factor or a minor factor.
For more information, please visit https://www.pershing.com/perspectives/five-key-themes-of-business-transformation.
The survey was conducted by Aite Group among 290 U.S. financial professionals from broker-dealers, banks, insurance firms, and registered investment advisors during the month of July 2017. The survey gauged financial professionals’ sentiment around, and their response to, the shifts in the business and regulatory environment, as well as their attitudes toward new technologies.
1 The study surveyed 290 U.S. financial professionals from broker-dealers, banks, insurance firms, and registered investment advisors.
About BNY Mellon's Pershing
BNY Mellon’s Pershing and its affiliates provide advisors, broker-dealers, family offices, hedge fund and ’40 Act fund managers, registered investment advisor firms and wealth managers with a broad suite of global financial business solutions. Many of the world’s most sophisticated and successful financial services firms rely on Pershing for clearing and custody, investment and retirement solutions, technology, enterprise data management, trading services, prime brokerage and business consulting.
Pershing helps clients improve profitability and drive growth, create capacity and efficiency, attract and retain talent, and manage risk and regulation. With a network of offices worldwide, Pershing provides business-to-business solutions to clients representing approximately 7 million investor accounts globally. Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. Additional information is available on pershing.com, or follow us on Twitter @Pershing.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries. As of June 30, 2019, BNY Mellon had $35.5 trillion in assets under custody and/or administration, and $1.8 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.