In a matter of a few weeks this past spring, financial advisors were plunged into crisis mode seemingly overnight and out of nowhere.

Every crisis is unique, but several trends emerging from this crisis and recession could forever change the advisory business. These changes offer incredible opportunities for some advisors, but those who can’t or won’t adapt risk being left behind. They need to pay attention to remain relevant and competitive as we emerge from the turmoil.

Cybercrime
One emerging trend involves cybercrime, now a major threat to nearly all firms, many of which have had to cobble together work-from-home cybersecurity policies in just days. Firms now face a greater risk of attack than ever as many of their employees work from insecure home workstations and internet networks.

Financial institutions are always among the most vulnerable to cybercrime. In a recent article in ETF Trends, Stephen McBride asserts, “The coronavirus is laying the groundwork for a massive cyberattack … and the largest cyberattack in history [will happen] within the next six months.”

Since remote working will likely continue for months, and cybercriminals are increasing their frequency of attacks during the pandemic, advisory firms will need to adapt quickly, train their staff and be vigilant in protecting clients’ data.

Streamlined Portfolio Management
Many advisors are still stuck in the old commission-based portfolio management model, doing custom portfolios for every client with an inventory of thousands of positions.

In early 2020, the stock market entered a bear market in just a few weeks—then quickly reversed course. It has risen 40% since the March lows. How can advisors who customize portfolios for every client possibly keep up in a rapidly moving market?

Advisors who have embraced a more limited “menu” of options for clients or who maintain portfolio models were able to take action and rebalance quickly.

Streamlined portfolio management allows advisors to focus on the higher-payoff activities of meeting with clients and making strategic portfolio and financial planning decisions while better keeping up with markets that are becoming increasingly fast-moving and volatile.

Fiduciary Status Required
Even though the Department of Labor’s original fiduciary rule died in an appeals court, it remains to be seen what future fiduciary standards for advisors will look like. I’ve noticed an important trend over the last five years—more consumers are becoming aware of the importance of their advisor’s fiduciary status. Up until a few years ago, they had no clue what the word “fiduciary” meant or why it was important. But increasingly, people who want to work with advisors broach the issue and ask about fiduciary status and what it means for their relationship.

As a result of the increased consumer awareness, many non-fiduciary advisors will struggle to demonstrate to potential clients that they can be trusted to the same extent their fiduciary counterparts can to avoid conflicts of interest and always act in the clients’ best interest.

Face-To-Face Becomes Screen-To-Screen
Clients of all ages are becoming comfortable with Zoom videoconferencing and will likely prefer to continue to meet virtually since the platform offers many conveniences and advantages. As time passes, I believe a return to regular in-person meetings may end up being the exception rather than the rule. This trend has several implications for advisors.

First of all, the advisors who can present well to a camera, using technology proficiently to build rapport with clients and prospects through a screen, will be able to capitalize on the move to virtual to win more business. They’ll also open up opportunities to expand geographically.

First « 1 2 » Next
To read more stories , click here