Secondly, advisors who relied on face-to-face prospecting will need to get creative about shifting their business development efforts to digital. It’s a real challenge that advisors need to figure out quickly if they still want to grow over the next 12 to 18 months and beyond.
Those who demonstrate leadership and steadiness through consistent virtual communication will deepen the trust and their relationships with clients during this difficult time.
The Disruption Of Accelerated Retirements
A recent study by the National Center for the Middle Market found that Covid-19 will prove catastrophic for 25% of businesses in their survey. In my own conversations with business owner clients (and other colleagues who work with business owners), I’m finding that Covid may end up accelerating retirements and business exits for those who are close to retirement and don’t have the energy to rebuild. Advisors, then, will have the opportunity to help them navigate the path as they leave the workforce.
Depending on how long the recession and market downturn last, it’s possible that many baby boomer advisors will also decide to accelerate their retirement for the same reasons, and that presents an opportunity for younger advisors to buy firms at lower valuations and serve clients while facing less competition.
Rightsizing, Not Scaling
Staffing costs are the largest expense for most advisory firms, and those that have been expanding and adding staff during the bull market of the last 10 years might now be questioning their decisions amid a drop in revenue and continued uncertainty.
Their continued move to paperless offices, however, will save time for client service staff, allowing time and resources to be used more efficiently. Advisors who can adapt and better outsource their non-core functions to tools like Calendly, virtual assistants and gig workers hired on platforms like Upwork and Fiverr will be able to keep head counts and costs lower.
After staffing, a close second for an advisory firm’s expenses is office rent. As more clients adapt to and likely prefer virtual meetings, advisors will undoubtedly start to question why they are paying thousands of dollars on expensive office rent every month (especially if they are in fancy and expensive downtown offices).
In addition, many firms that shifted to virtual operations have found that their staffs were able to work efficiently from home, so they will likely begin to look seriously at downsizing or eliminating their expensive office space when it’s time to renew their leases.
Advisory firms that choose to rightsize will be able to take advantage of the significant cost savings to bring more to their bottom line and improve their value.
Ashley Micciche is the chief executive officer of True North Retirement Advisors.