The financial advice industry has a bright future, but it will take significant preparation for advisors to flourish in it, according to a recent report.

Among the main challenges faced by the industry is a rapidly-aging advisor population, according to a report from the Investments & Wealth Institute. What’s more, the industry is also experiencing a shortage in practice management training that could fill the void being left by retiring advisors, the institute says.

At the same time, the number of advisor teams is shrinking as fewer but larger teams work with fewer but wealthier clients, according to IWI. There’s also a need for an evolution of roles on the team, which isn’t typical for wealth management, the institute says. And mega-teams must develop specializations through an evolution of skills, while the industry is facing the need to segment clients, according to the report.

Meanwhile, automation is increasingly blurring the line between full-service offerings and DIY approaches, accompanied by a move by advisors away from mere investment management to more sophisticated investment consulting, the institute says.

And while advisors should embrace technology rather than fear it, the proliferation of robos in the industry means that human advisors must learn to differentiate their value proposition and be ready to offer more sophisticated investments, such as private equity, for example, according to the report.

As advisors face these challenges in how they deliver advice, meanwhile, they must also prepare to meet rising expectations from consumers, including a growing awareness of conflicts of interest, the institute says. At the same time, advisors should be ready for their fees to slip as a result of the regulatory environment, according to the report.

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