That underserved 80% now represents the biggest potential gain for advisors and companies able to connect with them. If the incumbent players can’t figure out how to engage, the 80% will be the scale play for robos and other disruptors to the human-dominated advisor world. Digital tools can help the human world, but their adoption by clients remains low. How did this happen? Blame the Old Bull Market. Who needs client relationship management when the market is compounding at 14% per year?
For those advisors who pivot to the new reality, the changes will be worth it. The New Bull Market is more than 10 times the size of the old one in its infancy. Consider that $2.5 trillion is now held by retirement plan participants age 55 and over, who had nothing before the Old Bull Market. Retail managed accounts have swollen to more than $7 trillion from a cold start in the 1980s. Residential real estate equity is now worth more than stocks and bonds, and nearly $70 trillion will be rolling downhill to next gens from older clients who were pups when the Old Bull Market was forming. Sure, there are more advisors now—but they are retiring as fast as the clients. If the Old Bull Market stalls, those retirements will speed up.
Next Time
I believe this is the best time ever to be a financial advisor and that any advisor can double their business in 2022. Here’s how I do the math:
• The definition of “client” is expanding—it’s a relationship that will now include nine to 15 people across three generations.
• Advisors could increase their assets under advisement by 25% to 50% when they take into account the assets they don’t currently hold and their clients’ use of multiple providers.
• Advisors will be able to capture profits from managed assets and convert a portion to retirement income and protected income sources like annuities.
• Advisors will be able to turn to life insurance sales to fund estate plans and provide for heirs.
• Security-based lines of credit will help clients achieve liquidity but also help advisors retain and attract additional managed assets.
• Advisors will be able to use digital means to better engage unengaged clients—the other 80%.
Steve Gresham is CEO of the Execution Project, a firm focused on reimagining “retirement,” and is also managing partner of Next Chapter. Formerly the head of Fidelity’s Private Client Group, he is also a senior educational advisor to the Alliance for Lifetime Income. See more at theexecutionproject.com.