Natixis Investment Managers 2024 Financial Professionals survey covers 2,700 global financial professionals in 20 countries about their investment outlook, including 650 financial professionals across Asia.

With $84 trillion set to pass from one generation to the next over the next 20 years, Asian financial advisors are feeling the pressure, with nearly half saying that it poses an existential threat to their business, according to a Natixis Investment Managers survey. 

However, despite navigating long-term demographic challenges and continued short-term economic risks, financial professionals in Asia remain optimistic about their prospects, with advisors anticipating an average of 12.4 per cent growth on a one-year basis and annualised growth of 13.5 per cent over the next three years.

Natixis IM surveyed 650 financial professionals across Asia, providing insight into advisors' growth strategies, their challenges, and how they are adapting their business to market fluctuations. 

The race to thrive
Of all the hurdles facing Asian advisors in growing their business, keeping current assets on the book is the most critical. Findings from Natixis IM’s 2024 Financial Professionals survey show that almost half (49 per cent) are increasingly worried that they will not retain assets from clients’ spouses or next-generation heirs. In fact, 40 per cent say that they have lost significant assets through generational attrition.

As such, financial advisors are making retention and prospecting a priority in anticipation of the Great Wealth Transfer. Advisors in Asia report retaining client relationships 72 per cent of the time when a spouse inherits. However, when clients' children inherit, they’re successful less than half of the time (44 per cent).

On acquiring assets, global advisors realise the need to prospect for new clients but currently dedicate only 9 per cent of their time to it. Additionally, despite concerns about wealth transfer and asset retention, nearly half of Asian advisors are not targeting those aged 18 to 34 (46 per cent), the survey shows. Instead, when it comes to prospecting, seven in 10 (70 per cent) in Asia say they are focused on those between the ages of 35 and 49, while 82 per cent are focused on those between age 50 and 59.

Navigating risk
In an environment marked by the first interest rate cuts in four years, market highs, and slowing growth, financial advisors have also had the added demand of navigating a year of contentious elections globally. However, 67 per cent of advisors in Asia believe that underlying fundamentals are more important than election results. In addition, more than half (61 per cent) believe the results of the upcoming US election have already been priced into the market.

Looking ahead, public debt is a risk concern for six in 10 (65 per cent), with 69 per cent saying that persistently high rates make public debt even more unsustainable. With the continuing market rally, 39 per cent of financial advisors in Asia also warn that the biggest risk for their clients is chasing returns by trying to time the market, the survey shows.

Demand for private assets
Advisors are also under pressure to deliver on the growing demand for private assets, with three in 10 (33 per cent) seeing it is one of the key growth areas for their business. Given increased investor demand, half of Asian advisors plan to include them in portfolios within the next five years. They also report clear benefits, with 57 per cent saying private assets have improved outcomes for their clients. Yet 73 per cent say that  it is still difficult to build a portfolio of private assets at scale.

Challenges in upping fixed income in client portfolios
Alongside the need for greater education on private assets, one of the main difficulties facing investors in today’s market is their lack of understanding about bonds, interest rates, and fixed income investing. Over nine in 10 (92 per cent) of Asian financial advisors surveyed said it has been a challenge to increase fixed income allocations in client portfolios. What makes it harder, according to four in 10 (40 per cent), is their clients’ knowledge, or lack thereof, about fixed income.

“Of all the challenges facing advisors however, keeping current assets on the book is the most critical. Advisors now need to adapt their strategies even more to appeal to the next generation of investors. Finding more time to deepen relationships with clients and financial planning service offerings will be crucial to the success of their businesses in the long run,” Dora Seow, CEO of Natixis Investment Managers Singapore, said.

Natixis Investment Managers surveyed 2,700 global financial professionals in 20 countries. Data was gathered from June to August 2024 by the research firm CoreData with additional analysis conducted by the Natixis Centre for Investor Insights.