Last spring, the world changed almost overnight. The financial industry suddenly found itself in crisis mode. Financial advisors had to adapt as quickly as possible without understanding what America's economic future would be post-Covid.

Advisory owners and employees have been watching and analyzing everything they can to stay ahead or just barely caught up with the ever-changing markets. None the less some essential changes are surfacing due to this crisis. To remain relevant as we move out of this recession, FA-Mag recommends the following changes for the financial sector:

Cyber Security

Financial institutions are at risk for cyber-attacks now more than ever before. It's a bit scary with employees working from home and makeshift cybersecurity policies put in place to accommodate the overnight pandemic. Home computers are generally unsecured, and the internet networks available to people working at their kitchen table are not as secure as they might be in a corporate setting. With financial institutions being among the most vulnerable and sought after in cybercrime, it's a matter of when not how a massive cyberattack will happen. Staff needs to get trained, companies need to adapt quickly, and client data needs protecting at all costs.

Streamlining portfolio management

The traditional commission-based model of doing custom portfolios for each client with too many positions is not a model that can outlive this pandemic. When the stock market entered a bear market quickly this year, then suddenly was up 40% from the March lows, the old model would not allow advisors to customize individual portfolios fast enough. If a limited menu approach is adopted, financial advisors could quickly do the necessary portfolio maintenance and rebalancing. By streamlined management, the focus can be on higher-payoff activities such as client meetings, strategic planning decisions, and volatile markets.

Fiduciary status

After Trump took office, the original DOL Fiduciary died. No one knows what to expect with the future of fiduciary standards for advisors. Regardless, over the last five years, the consumer has begun to understand their advisor's fiduciary status. Most people didn't even know the term fiduciary a couple of years back. The topic is becoming more frequently brought up between clients and advisors and what it means to the relationship. Clients are starting to wonder if they can trust non-fiduciary advisors.

Virtual Meetings

Zoom has become the new office space. Most clients and financial advisors are having to learn new tech to manage relationships throughout Covid. The virtual environment is most likely going to be the new norm. The office may be a thing of the past or at least less utilized in the future. The advisors who are more comfortable with tech and use it to their advantage will capitalize on the post-Covid era, win more business, and expand geographically. As a financial advisor, it is imperative to get all business onto a digital platform in the next 12-18 months if one plans to survive.

Accelerated retirements

The National Center for the Middle Market stated that Covid-19 would be catastrophic for up to 25% of businesses. It seems that Covid is accelerating retirements and closing businesses for many owners who were close to exiting before the pandemic. Here is an opportunity for advisors familiar with business owners to help them navigate their retirement and business exit. It's also an opportunity for baby boomers close to retirement who may take an early out to accelerate their retirement plans as well. Perhaps younger advisors will look to buy firms at lower valuations.

Firm owners stop scaling

Staffing costs are huge if not one of the largest for advisory firms. Staff expansions will slow or decrease, paperless transactions will increase, and efficiency will be redefined. Overhead will most likely be reduced by virtual offices, working from home, or shared spaces instead of signing leases. Online resources such as Upwork and Fiverr will be the new hiring platforms for as-needed work at a fraction of the cost. The idea of downsizing, especially overhead fees, increasing productivity and income, will be widely adopted. It won't be odd to crawl out of bed, jump on a Zoom meeting coffee in hand, and kids and dogs making noise in the next room.