The impact of our global pandemic will continue far into the future, like the aftershocks of a powerful earthquake. As one of the global economy’s largest pillars, financial services has received an odd combination of benefits and challenges from significant trends already underway when Covid-19 blasted those trends into overdrive.
Record operating results for both advisors and financial institutions pair strangely with mass job resignations, client anxiety is rising along with stock and bond prices, and the number of people retiring exceeds the number turning 65. Response to these complex conditions is predictably uneven, but the leaders have tapped a common partner in their success—their clients.
Active engagement is creating innovation sorely needed to help a retiring age wave now rolling off at 12,000 per day. But the innovators are still outnumbered by the spectators, and the air cover of the pandemic will not be sufficient protection from anxious and frustrated retirees seeking help.
Adding to the malaise is the odd backdrop of record financial results being reported every day by financial firms. Those numbers are buoyed by an indefatigable 12½-year bull market, further dulling the urgency to innovate. But stock prices don’t grow to the sky, and more research indicates anxiety among investors of all ages, creating a need to prepare for a day of reckoning. Providers beware: Alternatives to you are but a mouse click away these days—and there is evidence that clients are increasingly on the move.
Adoption Is The New Innovation
My review of current efforts reveals two nagging issues for the business—the need to dramatically simplify retirement solutions and the imperative to improve the adoption/penetration of those solutions. The first is a design challenge, the second is a service model challenge. The first requires a commitment to true consumer-centricity—empathy for both the client seeking the solution and the advisor willing to deliver it. The second is a commitment by the advisor and the advisory firm to make sure all clients receive the benefits of the firms’ best solutions.
The first requires a champion—and so does the second. Both of those roles warrant senior leadership status in today’s advisory firms. When I ask a CEO, “Who is your head of innovation and who is your chief customer officer,” I too often get a complicated answer instead of two names.
The right folks with the right stuff are mission-driven. But they don’t stop there; they continue on to make sure the message is delivered, the services followed, the results achieved. Sixty percent of retirees have access to a retirement plan at work, but 40% do not.
Is 60% the best we can do for the largest generation of retirees in history? And that of course presumes the benefits are subscribed and maximized. So the 60% is really not 60%. The standard of care should be whether you succeed in retirement, right?
There is a false sense of achievement whenever an innovation is born. Well-meaning, otherwise brilliant fintech superstars create fabulous tools that too often stay in the showroom. Adoption of tools follows a funky organizational Murphy’s law that the more impact your tool might have, the more intimidating it is for the potential client company to buy it. You already know the corollary aspect—the bigger the company, the less likely they are to buy your idea—or to do anything. The inertia of current success pours like cement through the org, hobbling players that once were the innovators themselves.
We Need More Happy Hours
Future industry leaders take note—you have a lot of choices of where to lean in. There is a heady array of opportunities to transform your historic offerings into more effective and client-friendly solutions and grab your share of the market. Here’s a partial list of industry developments taking shape—abridged to show “the way it was,” where I think we are today, and what will be the future norm. Again, it’s only a partial list, with a lot of editorial license. Consider this a start to more robust conversations like we have in Next Chapter:
Redefine the client. End the fixation on a single head of household, typically male, typically interested in the markets. There’s a new consumer in town, and she is concerned about the ability to pay for healthcare, afford rising prices for everything, how to care for aging parents and the welfare of her adult children. The client is now a three-generation household on average, and yet we do not make the management of that household empathetic or easy.