401(k) Specialist Issue 1 - 2024 - 7

401(k) NEWS YOU CAN USE
AI, Wealth Management and Retirement
to Grow in 2024
GENERATIVE ARTIFICIAL INTELLIGENCE (AI), cybersecurity concerns,
inflation, and the convergence of retirement and wealth management
are among the leading retirement plan strategies this year that are expected
to not just change the industry, but evolve it, according to a new
report by MarshMcLennan Agency.
With AI gaining even more traction in 2023, the report predicts the
technology will disrupt the finance industry within the next years, to the
point where it can personalize investment recommendations, analyze
market data, and propose new trading strategies by simulating different
scenarios. It sites a past Boston Consulting Group report, which forecasts
that generative AI strategies will be integral for organizations aiming to
be industry leaders in the next five years, and even more so when paired
with human expertise.
" While AI can provide valuable insights and automate aspects of financial
decision-making, the guidance of a skilled financial advisor remains
invaluable, MarshMcLennan writes in the report. " Financial advisors bring
a deep understanding of an individual's unique financial goals and life
circumstances, allowing them to tailor AI-generated recommendations
to the client's specific needs. They provide a crucial layer of human
oversight, ensuring that AI-driven decisions align with a client's long-term
objectives and risk tolerance. "
The report emphasizes how working with a retirement plan advisor can
help protect against fraud and cybersecurity concerns. According to the
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SEC, retirement advisors must take " appropriate measures to safeguard
customer accounts and prevent account intrusions; oversee vendors and
service providers; address malicious email activities; respond to incidents;
and manage operational risk resulting from work-at-home employees. "
With a rising demand in comprehensive financial guidance, more
advisors are extending their retirement services towards holistic offerings
that include wealth management, and acquiring businesses that provide
such services.
" As individuals increasingly emphasize comprehensive financial
guidance, financial advisory firms are broadening their offerings to cater
to this demand, " MarshMcLennan concludes. " This transformative shift
is not merely a conceptual change. It is actively altering the services provided,
empowering individuals with the tools and knowledge to navigate
their financial future successfully. "
The Number of
Financial Advisors
is Slowly Falling
FINANCIAL ADVISORS are gradually dwindling as trainees fall out and
veterans retire, highlighting the serious need for the industry to attract
and retain talent, reports a recent study by Cerulli Associates.
The firm's latest study finds that over the next decade, 109,093 advisors,
or 37.5% of the industry headcount, are set to retire-and will take
41.5% of the industry's total assets with them as a result.
Meanwhile, the failure rate of rookies leaving the financial advisory
sector falls around 72%, a sign that firms must do a better job at
recruiting talent.
Professional networking and referrals are critical for firms to build a
solid talent pool of advisors, with 32% of current rookie advisors having
been referred by a personal contact. How rookies grow and develop
within their advisory roles also has a large impact on their willingness to
stay with a firm. Senior advisors have a responsibility to ensure rookies
are provided with learning opportunities that extend to client-facing and
asset-gathering roles, for them to gain experience, be satisfied in their
roles, and eventually ease transition periods. This all leads to a longer-tenured
staff, Cerulli writes.
" Rookies rely upon strong mentorship from their peers, exposure to
successful financial advisors, and increased training on various financial
planning topics, " said Andrew Blake, associate director at Cerulli, in a
statement. " It is crucial for RIAs [registered investment advisors] and B/Ds
[broker/dealers] to continue to develop programs and training methods
to aid rookies in financial planning and other skills to adequately prepare
them as they embark upon a new career as an advisor. "
ISSUE 1 2024 | 401kSpecialist.com
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401(k) Specialist Issue 1 - 2024

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