No business has the right to exist in perpetuity. If it cannot grow and prosper then eventually it will cease to survive
No business has the right to exist in perpetuity. If it cannot grow and prosper then eventually it will cease to survive. In the investment management industry disruption is becoming the new norm as advisors who adapt will flourish, while those who do not will suffer business atrophy and likely become extinct. Advisors are at a crossroads as the industry is changing and technology in the guise of so-called robo advisors may be the catalyst to prompt changes.
The advisory industry is currently engulfed in a fog of mistrust, a lack of transparency and a shortage of unique products. While the industry is not sitting on the precipice of disaster, advisors’ focus on technical competence can only go so far, because unfortunately competence alone will not ensure continued existence. Advisors must adapt or risk becoming irrelevant to their clients. They need to start using innovative solutions to spur more meaningful services and not select investment products that conform to internal interests.
Most advisors are not rusting at their desks, but at the same time the old methods of business: “smile and dial”; “spray and pray”; and “one size fits all” just do not work anymore. Advisors need to conduct a serious analysis of the great work they do and how they do it. To succeed in the unfolding age of the robo advisor, those that survive and flourish will not be able to dismiss change but instead embrace disruption. Advisors quite simply need to use better and more comprehensive digital services to make themselves more valuable to clients.
Technology is driving innovation and transforming the way advisors work. Advisors that fail to move quickly and decisively to adopt new technologies risk being rendered obsolete by those that do. Advisors need to recognize that they do not have all the answers and they need to set their gaze outward to find new ideas that will distinguish them from the pack by focusing on their true strengths.
Brand Differentiation
Regardless of the size of your practice, the ability to differentiate your distinct advantages will be vital. The advisors who thrive in the future will be able to effectively educate their clients on who they are, what they stand for and what sets them apart from the competition. Clients these days want high quality and transparent products for a fraction of the cost and eventually someone will supply it to them if you cannot step up to the plate.
Human Touch
The greatest value a financial advisor can offer is keep clients focused on what matters most; the big picture. The big picture could involve retirement planning, education planning, business succession or major life events. Being the constant when a client’s big picture changes is invaluable and cannot be easily replaced through automation. An advisor is the calming influence when markets become volatile and clients tend to make choices that will damage their long term prospects. Advisors can change a client’s behavior more effectively than any automated online service or call center. Advisors can just as easily initiate contact with clients around life events and other changes that might impact their goals.
Leverage for Scale
Advisors need to incorporate services that allow them to offer relevant products to younger, lower net worth clients who will eventually become the next generation of high net worth clients. The days of clients shifting to traditional advice platforms when they reach middle age is coming to an end. Advisors will need to have an online presence that resonates with a younger clientele while still offering sophisticated, value added solutions across all age groups.
Client Focused
The days of salespeople as advisors are disappearing quickly. The onset of universal fiduciary standards will change the playing field. Many surveys indicate that fewer clients trust that decisions being made by advisors are solely in their best interests. Clients who are currently plagued by opaque fees and poor service levels will begin to search for other alternative platforms. This is especially true as the trust gap widens and the next generations of digital natives seek more control of their wealth and more access to information.
In today’s age, modern technology is an entry level requirement. Unfortunately the onslaught of cheaper competitors will eventually force advisors to step up with what they have in abundance; themselves. You do not have to change who you are but rather give more of yourself to your clients. Let your personality shine. Show what makes you who you are and stop trying to please everybody. Do not water down your message and you will attract the right kind of clients.
In the past, advisors had all the knowledge. Advisors were the gatekeeper to investment information. Now, information is essentially free and clients no longer blindly trust that their adviser is infallible. As an advisor your value lies in helping clients make intelligent decisions, not in trying to add 50 basis points of out performance. Do not let all the disruptors automate you out of existence or drive the humanity out of your practice. Seek out a new way to assimilate the disruptors into your practice and build on your strengths.
