One of the oldest sayings in the wealth management industry is “Mutual funds are sold and not bought”, implying that investors’ purchase decisions are made primarily as a result of recommendations made by financial advisors and less so the desires of investors. Notwithstanding the value of advice in helping investors reach investment decisions, traditional wealth management business models are changing as new mutual fund, ETF and “Robo Advisor” entrants, new technology platforms and new regulation are introduced to the marketplace.

Investors are gaining direct access to investment funds through a variety of channels and in some cases, disintermediation is occurring as some fund companies try to establish a direct relationship with investors, while not alienating their advisor base. Witness the launch of Vanguard’s Personal Advisor Services start up business in the U.S. While still in the pilot phase with no paid advertising support, the new service rose from $755 million AUM in 2013 to $10.1 billion at the end of last year. Read more on “Vanguard’s $10B Digital Juggernaut That You Don’t Know”.

Good advisors can likely withstand these modern day challenges – due in part to the increasing complexity of financial products and the time constraints faced by most investors – however, it will take a concerted effort from dealers wishing to remain relevant in the evolving financial landscape.

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