Sondhelm: A great story is going to be relevant, honest, focused and help prospects understand and solve their priority issues. It’s got to have purpose and be able to generate thought leadership and possibly change perspectives or behavior.
Readers will tend to dismiss anything that’s an overly controlled, self-serving, promotional or product-placement type piece thinly disguised as news. Anything that is unclear, full of jargon or inconsistent will reflect badly on its author and lose integrity in the eyes of the reader, hurting one's reputation.
Hortz: Any other major challenges for advisors and asset managers we have not discussed yet?
Sondhelm: A few years ago, no one saw the proliferation of the robo-advisor but today it’s a factor and the industry has had to react to it. The robo-advisor asset share continues to increase whether as stand-alone companies or part of a larger entity. Presently, robos manage about $75 billion in assets, but this may increase to $250 billion by 2020, according to data from Statista, an online statistics company, in the InvestmentNews 2017 Advisor Technology Study.
Demographics are also forcing change. The country is aging. As clients enter the income withdrawal stage, advisors need to find a way to replace those assets leaving the firm. Similarly, when a client dies the heirs often take the assets elsewhere. It’s very difficult for advisors and subsequently asset managers to win in this scenario.
According to a Pershing study, an estimated $30 trillion in wealth will transfer to the next generation of investors over the course of the next 30 years. As this wealth is transferred, many in the next generation will be looking to align themselves with new financial advisors. Studies show that 90% of millennials will leave their parents’ advisor and over 60% of advisory firms do not have a plan in place to court millennials.
It’s a Darwinian environment, and the larger firms have generally shown a greater ability to adapt. This has become evident in such areas as marketing, technology, compliance and recruitment.
Hortz: What is your best advice for independent advisors and asset managers in building a growth strategy in an operating environment of accelerating business and cultural change?
Sondhelm: We must accept that technology now drives change faster than ever before, that the consumer has a stronger voice and demographics will force us to adjust. Some smaller players may be able to thrive by developing a niche and building a reputation around it. Others will find that cultivating a digital and media presence will help mold them into the thought leaders they aspire to be.
In general, I’d say don’t be afraid to go outside your so-called comfort zone and seek objective advice of experts. Sometimes a new perspective is needed in order to achieve growth. Ask yourself why a person should invest with you and make sure your value proposition is straightforward as you build your business for the long term.