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BNY Mellon Survey: Political and Regulatory Uncertainty is the Main Challenge to Business

A new survey of financial professionals released by BNY Mellon’s Pershing 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 survey, 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’s 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).

However, 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 fiduciary 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 fiduciary 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 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 fiduciary rule is implemented in its current form.

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 3 percent of all respondents say they are using a digital advisor platform and only 2 percent say they have made the decision to implement one.

The importance of talent in driving growth is overlooked, according to the survey. 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.

The survey, “Business Transformation: Navigating A Path Forward,” was conducted for BNY Mellon’s Pershing by the research and advisory firm Aite Group. The information was gathered from 290 online surveys with financial professionals from broker-dealers, banks, insurance firms, and registered investment advisory firms, as well as 20 phone interviews with senior executives at broker-dealers.


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