In forecasting what lies ahead in 2022, one lesson from the year just passed is that long-term trends tend to persist, even if they sometimes take unexpected turns.
For example, two long-term trends that are shaping the economy — the aging of the population and advancing technology — continued. These trends tend to be deflationary, but Covid-induced supply-chain problems and the vigorous monetary and fiscal stimulus that came in the pandemic’s wake resulted in a burst of inflation that is turning out to be more than merely transitory.
Long-term trends in the financial advice business also continued, with surprises coming mostly in the form of positives. Outstanding producers continued to be in demand, only more so. Profitable and growing registered investment advisory firms became even more attractive acquisition targets. And much to the delight of independent broker-dealers and RIA firms, more employee-advisers decided to go independent.
In this issue, the InvestmentNews reporting team looks ahead to 2022 and sees many of these long-term trends continuing.
Bruce Kelly’s piece on brokerage firms anticipates that the market for successful advisers will be running hot for at least another year. Since the economics of training militate against firms devoting time or resources to develop advisory talent, advisers who have run the gauntlet and developed a successful business are likely to find themselves in demand no matter what conditions prevail. With established producers in the catbird seat, look for wirehouses to do everything possible to make them happy. At the same time, after weighing the economics, more employee advisers are likely to go out on their own to capture at least some of the revenue that now goes to their employer.
On the tech front, Sean Allocca notes how the increasing availability of financial planning software may lead to its commodification. Nevertheless, even ultra-simplistic, app-based planning is likely to be seen as helpful — to a public increasingly aware of financial planning’s value as well as to advisers, who will use the tools to attract those migrating toward a managed relationship. Technology’s power to personalize will keep growing.
Reflecting national trends, political tensions at the Securities and Exchange Commission also are likely to keep growing this year, predicts Mark Schoeff Jr. He notes that Democratic appointees will outnumber Republicans, at least for a while. Does that translate into better protection for investors or more heavy-handed Washington interference? The answer probably depends on whether you view the world through blue- or red-tinted glasses.
Finally, in his look at markets, Jeff Benjamin’s sources see a continuation of the long-run bull market, albeit at a less torrid pace given the lower valuations that come with anticipated higher interest rates. But if there’s one area where unexpected twists often occur, it’s in market performance. A natural disaster, political shakeup or unforeseen economic shift — virtually anywhere in the world — could completely upend the consensus. And who knows, interest rates may even end the year lower than where they started.
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.