The first cell phones were called "car phones" because they permanently mounted in your car. They cost $2,000 plus 20 cents to 40 cents a minute and they only made and received phone calls. We were THRILLED to have them. Car companies built them physically into their cars, mounting them inside the console or the dashboard. They were ubiquitous ... until they weren't. How much would you pay today for a cell phone permanently mounted in your car? Nothing. You would not buy the product at any price. The new normal is the "smart phone." And that change happened fast.

A good example of an old-normal to new normal game-changer in our industry is Charles Schwab. Before Charles Schwab, the old normal was to pay hundreds or thousands of dollars for a single stock trade. In the old world, a stock commission was based on two variables: 1) the number of shares; 2) the price per share. Schwab figured out that stock trades are a fixed cost business and just because you have more shares that are worth more money you shouldn't have to pay more to sell them. 

Ditto on the buy side. He entered the industry by telling the world that he'll handle all the stock trades you want at the incredible bargain price of $150 per trade. And that became the new normal ... until it wasn't. How many stock trades would you do today for $150? The new normal is seven bucks. The irony is that today Schwab looks a lot like the kind of firm they criticized when they began. They basically entered the industry saying, "You are being overcharged by your stockbroker. Don't pay hundreds or thousands of dollars to a stockbroker or so-called financial advisor. Do it yourself and pay less." Now they have branch offices, financial advisors and a robust support system for independent financial advisors. First they created a new normal in the industry and now their own new normal is very different from their original value proposition.

Needless to say, the stockbrokers in that soon-to-be-old world (mid-1980s) were not happy with Charles Schwab. Many believed they would be put out of business and, indeed, some quit. To some extent, I believe Schwab's killing of the stockbroker spurred the mutual fund explosion.

Many stockbrokers shifted to being mutual fund salespeople. And many mutual funds paid 8% up-front commission ... until they didn't. The new normal became 4%. And then the asset-gathering movement began. "Annuitize your book!" the leaders of the financial services industry exclaimed. 

Which meant, wrap an ongoing percentage fee around money management services such as mutual funds or separately managed accounts. That percentage continued to be commoditized and landed, more or less, at 1%. Many advisors could not imagine "living in a 1% world" ... until they could and the new normal became about 1% of AUM to the advisor.

The takeaway here is that you shouldn't get used to things being a particular way, because they can change rapidly. The rate at which the current normal gets replaced by the new normal is accelerating across all industries, including ours.

Here are some examples supporting my belief that the new normal will be a flat fee for advice and could be mainstream soon.

RIA-only firms growing rapidly.

Broker-dealers going from accommodating advisors who want to be fee-only to actually supporting them.