How investment advisors respond to clients’ changing needs and demands is likely to separate the future winners from the losers as the brokerage industry continues to grow. according to Earl Bederman, founder of industry consultant, Toronto-based Investor Economics Inc. (IEI).

Bederman shared his prognostications in a wide-ranging, research-focused presentation to 80-plus advisors at the Investment Dealers Association of Canada’s Private Client Day in Mont-Tremblant, Que., on Saturday.

One of the key trends that Bederman forecast is an increased emphasis on risk management over the next eight years. He argues that in the mid- to-late 90s, investors were risk-takers as they shifted from deposits into equities. That stance shifted in the 2000-2002 market downturn to risk avoidance. Bederman expects it to shift further toward risk management in the coming years — a shift that will change the types of products that clients covet and the type of advice they demand.

He predicts that client demand for advice will continue to grow in the coming years, but that its emphasis will shift to investment solutions from security selection. There will be more demand for fee-based products, which offer more unbundling and customization. In turn, this will almost certainly lead to more consolidation, convergence among delivery channels and increased vertical integration.

To some extent, these trends have already favoured the big, bank-owned dealers, Bederman reports. However, thanks to technology and the alternatives offered by outsourcing firms, smaller, independent firms are increasingly able to offer the sophisticated solutions clients are demanding.

At the same time, some advisors are chaffing under the restrictions imposed by bank-owned firms, pushing them toward the independent firms.

Bederman also suggests that, thanks to these shifting trends, advisors will increasingly depend on high net-worth clients. IEI’s research shows that the top-end clients already account for the majority of investible assets in Canada. And, it predicts, this concentration will only intensify in the future.