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, and open up opportunities to expand geographically.
Secondly, advisors who relied on face-to-face prospecting will need to get creative about shifting their prospecting and business development efforts to digital. It’s a real challenge that advisors need to figure out quickly if they still want to grow their business over the next 12-18 months and beyond.
In addition, advisors who demonstrate leadership and steadiness through consistent virtual communication will deepen trust and their relationships with clients during this difficult time.
Accelerated retirements could disrupt the advisory business. 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 many business owners, I’m finding that Covid may end up accelerating retirements and business exits for many owners who are close to retirement and don’t have the energy to rebuild after this crisis.
Accelerated retirements for business owners will be an incredible opportunity for the advisors who are serving business owners and who can help them navigate their retirement and the exit from their business.
Depending on how protracted this recession and market downturn is, it’s also quite possible that many baby boomer advisors approaching retirement may decide to accelerate their retirements as well, rather than trying to rebuild their business after Covid, presenting an opportunity for younger advisors buy firms at lower valuations and to serve clients with less competition.
Firm owners will look to right-size, not scale. Staffing costs are the largest expense for most advisory firms, so advisory firms who have been expanding and adding staff during the bull market of the last 10 years will begin to question their staffing decisions after a drop in revenue and continued uncertainty ahead. A continued move to paperless will also save time for client service staff, allowing time and resources to be used more efficiently.
Advisors who can adapt and better utilize the outsourcing of their non-core functions to tools like Calendly, virtual assistants and gig workers hired on platforms like Upwork and Fiverr will be able keep headcounts and costs lower.
A close second for an advisory firm’s expenses behind staff is office rent, and often in fancy and expensive downtown offices. With more clients adapting to and likely preferring virtual meetings, advisors will undoubtedly start to question why they are paying thousands of dollars on expensive office rent every month.
In addition, many firms who shifted to a virtual-based team found that their staff is still 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 lease.
Advisory firms who choose to right-size their firms will be able to take advantage of the significant cost savings to bring more to their bottom line and improve the value of their advisory firm.
Ashley Micciche is the chief executive officer of True North Retirement Advisors.