[The Institute for Innovation Development interview series invites innovation experts, innovative business leaders and emerging FinTech companies to talk to our readers about their latest innovation activities. The series seeks to learn from innovative business creators, uncover innovation best practices, and apply these insights into a financial services business model.

We recently sat down with Bill Trigleth, EVP and Director of Research & Development, Cannon Financial Institute to discuss their newest research on advisor relevance in an operating environment of accelerating change and their new 3 position papers series – Financial Advisors: Relevance Today and Tomorrow.]

Hortz: You mention in your position paper series that there are 6 major challenges that fundamentally are putting financial advisors at risk. Can you briefly outline what they are and why you state that they specifically require new perspectives and different approaches?

Trigleth: Certainly Bill. What is certain is the continuation of technological advancement in hardware, software, and artificial intelligence is going to accelerate, not slowdown.  And the speed at which consumer’s react to and adopt these advancements should follow the same trajectory in financial services as we see them adopting technology in other industries.  That puts slow moving advisors at risk, and our goal is to help them assess the 6 major challenges assaulting them and explore how to cope with these risks in ways that help them meet today’s disruption but also arms them with tools to identify new disruptors and effectively deal with future challenges.

The six challenges we have identified are straight forward and should not be a surprise to anyone:

1      The assumptions underlying the investment advisor’s traditional business model are no longer valid. The services Advisors provided for investment management are now available 24X7, and for pennies on the dollar. Advisor must meet the challenge of free investment management services within their profit model.

2      New Market segments are emerging and most practices are not prepared to capture them.  Even the Baby Boomer’s as a segment are morphing into something new as they move into the new phase of asset spend down in retirement, they are acting much differently than when they were in the accumulation phase, and expectations of what they want from retirement and advisors is changing.

3      Today’s client is the Family. Driven by the trend of more women moving to the role of wealth decision makers, whether joining husbands in retirement planning or outright creation or transfers of wealth, their perspective is on both performance and provision. What does our family’s wealth mean for all our members?  Advisors who can craft product and service sets that are helpful to each member of the family, no matter their age, stand to differentiate themselves. As advisors start thinking like today’s most successful businesses, they will recognize the total economic value of the family. This moves them from thinking of maximizing profits from an account to realizing enhanced cash-flow over time.  When you think in terms of recognizing revenues from a set of parents and adding in their children’s potential, you realize every 2 child family has the potential to organically double your practice over time. There are some profound Practice valuation differences implied in this mindset change.

4      Advisors must shift from the role of technician to clinician. Technical expertise is a requirement for any Financial Advisor and yet at the same time, expert systems are coming on line that are faster, more accurate, and less expensive.  Letting expert systems do what they do best: capture data, analyze it and generate and display reports, makes room for human advisors to do what they do best; take the time to explore possibilities and potentials with the client, helping them make well informed decisions and then counseling behaviors to achieve better outcomes.

5      Disruptive technologies create challenges and new opportunities. In order to create the capacity to do the more human work of identifying meaning and purpose of wealth to the families that advisors serve, technology has to be leveraged.  Workflow automation, creating virtual presence 24X7, needs identification happening in real time, and changing the client experience so the client selects what services they deem valuable to them, is only possible because of new technologies. The Advisor can enjoy a reasonable profit margin because leveraging technology is what will allow Financial Advisors to flourish in this new age of consumerism