It is almost certain there will be fewer independent advisory firms in the next 36 months than there are today. Turbulent times and protracted market downturns weed out businesses unprepared for periods of rapid change and increasing complexity—particularly if advisors put their heads down and push things along the way they always have.

This has happened before. The Great Shift from commission revenue to assets under management in the 1990s led to the mass extinction of advisors who made a great living selling high-commission products. The 2000 Tech Wreck eliminated many advisors who succumbed to portfolios heavily weighted to emerging tech firms that measured success in eyeballs rather than profits. The Great Recession killed off financially feeble firms unprepared to withstand a protracted reduction in revenues and saw a distinct thinning of advisors whose value proposition was focused on performance over planning.

An Accelerated Pace
We are now in the early stages of the profession’s next evolution, driven by a global pandemic and alarming levels of market volatility. Trends that were slowly grinding through the profession are seeing sudden acceleration:

• The shift from relationships determined by investments to ones determined by advice has made it to prime time. The crisis has put platforms like Zoom on the map, and it’s putting advisors there too. People are locked in their homes, confronting the daily reality of their financial needs—and thus their need for financial advice. We’re already seeing an increase in demand for it, and suspect a surge after the lockdown.

• Interest in differentiated offerings has grown. Advisors can expect growth in the demand for specialized advice and client experiences as consumers emerge with a more pronounced me-centric perspective.

• The pandemic has exposed the AUM revenue model as inadequate to reflect an advisor’s value. Revenues are declining at just the time advisors are seeing critical spikes in client service demands, when they most need presence of mind.

• Younger and more forward-looking advisors have begun the shift to lighter virtual service models that appeal to broader consumer segments. That’s led to an increase in retainer and subscription fees as these advisors seek to meet the needs and preferences of the next generation of clients.

• Advisors are seeing pricing compression at the same time they face demands for service expansion—in other words, they’re being pressed to do more work for the same fees while managing increasing costs, complexity and mounting demands on their time. Firms of all sizes are scrambling to reduce costs, deliver greater value and drive growth.

• The pandemic has forced advisors to better understand their clients, whom to call in what order, what actions need to be taken for which clients affected in what ways, and what messages and by what means to best communicate with different types of clients. Firms of all sizes will increasingly rely on prospect and client data to deliver deeper, more specialized services while driving growth and maintaining margins.

• Our once slow trend toward remote connectivity and a virtual business landscape will now hurl forward with rocket ship velocity. Lockdown-imposed work-from-home restrictions are causing advisors and staff to pick up their laptops and settle into makeshift home offices, evolving our thinking about virtual staffing, office space and costs. At the same time, consumers are developing en masse comfort with remote technology like Zoom and with the idea of working remotely with a specialist rather than with the generalist next door. The word I use is “remotability”—the ability of employees, vendors and companies to successfully support remote working relationships. Increasing “remotability” reflects people’s ability to work with freedom and flexibility while maximizing productivity.

The Secret To Survival? Mindset.
What characteristics will we see in the survivors of this latest extinction event? Having weathered the market downturns of 2000 and 2008, I’ve learned it’s not the trends, technical expertise or tactics we take that determine our success. It's the quality of the thoughts that lead to them in the first place.

The secret to survival and growth in times of disruption is summed up in one word: mindset. Advisors who adopt and operate from an empowered, success-focused state will out-adapt, out-think, out-strategize and out-execute their peers in any market environment. Advisors whose survival instincts keep them rooted in the status quo, on the other hand, will be considered fossils by future generations.

In this future we are rapidly entering, a firm’s larger size will not give it a reliable advantage over smaller, more nimble businesses. A large, fancy office won’t be a key selling feature. Advisors willing to embrace new technology and approaches will become hyper-efficient, easing their workload and enhancing their client experience at a time when their counterparts are suffocating from service overload.

Take, for example, Adam Cmejla, one of my group coaching clients, who grew his practice 200% in just two years by shifting his fee model to a monthly retainer for advice. He narrowly focused his niche, specialized his marketing and automated Redtail workflows to systematize the client life cycle from prospect inquiry to ongoing service. This freed him to run his growing practice while fulfilling his lifelong dream of earning his pilot’s license.

Or take Tanya Nichols, an advisor who launched her own firm, upgraded her fintech suite to streamline her operations, and focused her services on women. This helped her grow more than 20% in two years while taking Fridays off to spend more time laughing with her children.

Advisors who voluntarily challenge themselves to move the quality of their thinking up a level will directly improve the quality of their business outcomes. In a business where you get paid to think, and your very survival now depends on it, the quality of your thinking matters immensely.

By expanding their mindsets, these advisors are seeing far steadier practices and a surge in prospect inquiries. Adam and I recently had to develop a six-week waiting list strategy and scripts to throttle the flow of multi-million-dollar prospects without pinching off opportunity or compromising quality.

At the enterprise level, my corporate clients are also on the offense, leaning into these trends by investing heavily in programs and platforms that help them meet the more focused needs of consumers and deliver quality advice at scale.

Of course, every firm is different, and so too are the problems to be solved and solutions to be embraced. But whether you're a small solo practice, a partner in a large RIA or the CEO of an enterprise that serves them, navigating the future successfully will demand different thinking and tactics than tradition dictates.

In the days ahead, the coronavirus pandemic will accelerate the trends reshaping the profession. As these tough times unfold, they will ultimately serve the profession—as a relentless business test that many advisory firms will not pass and the gateway to limitless opportunity for those firms that do.

Stephanie Bogan is a business strategist and success coach and founder of Limitless Adviser Coaching. She can be reached at stephaniebogan.com or [email protected]. Join Stephanie for a free four-part series "Open for Opportunity: How to Deliver Value & Drive Growth in Any Market” at www.stephaniebogan.com/go/SuccessStartsNow.