There’s nothing special about offering financial advice—and that’s part of the challenge for advisors, said Michael Kitces, partner in Pinnacle Advisory Group, an RIA based in Columbia, Md.

Just as clients have difficulty distinguishing between fiduciary advisors and brokerage representatives, they will have difficulty telling the difference between all of the various entities purporting to offer them financial planning, said Kitces in “Where Is Financial Advice Headed Next: Experts Explore Five Critical Trends,” a discussion on Thursday at BNY Mellon Pershing’s 2019 INSITE conference in Phoenix.

“I think we’re quickly entering a transition phase where financial planning and wealth management will no longer be enough to differentiate you,” he said. “Everyone says they do it. No client knows, no client can tell, after the fact. They’re usually there with their advisor and it’s a pain to change advisors.”

Not only can clients not differentiate between one form of financial planning and another, but firms are starting to have difficulty distinguishing themselves from one another, said Kitces.

For example, in the past when Pinnacle Advisory would compete for clients in the Washington, D.C. region, Kitces and his partners would often be the only fiduciary advisors offering holistic financial planning services in the field—and would win “80 percent” of the business they competed for.

“We used to win 80 percent of the business we went out for, and now we’re winning one-in-three clients because we’re one out of three firms competing for their business,” said Kitces. “That’s a coin toss. We’ve lost that differentiating edge.”

To some extent, Pinnacle and its competitors can draw small, nuanced distinctions between themselves along investment philosophies and specializations like tax and estate planning, but not all of these differences are meaningful to clients, he said.

Instead, the most successful financial planning firms of the next 20 years will be the ones who concentrate on very specific niches and develop specializations to holistically serve these customers, he said.

“When everyone else says we do financial planning, now the way to differentiate is to say we do financial planning specialized for doctors,” said Kitces.

Kitces cited the example of a planner in the Midwest who specializes in bass fishermen and prospects from high-level professionals who have to allocate multimillion-dollar tournament awards and endorsement deals. 

First « 1 2 3 4 5 » Next