The good news is that this year is unlikely to be worse than 2020.
As we look back at a year of significant traumatic events and an ugly start to the New Year, entrepreneurs and business leaders will have to adapt to the aftermath. But they should not wait for anything to “return to normal.” Nothing will ever be the same again, so it’s best that we embrace the future and help shape it for our family, friends, colleagues and clients.
That’s easier said than done to be sure. But what might help is this list of trends to anticipate in the future, something I’ve developed while monitoring the industry.
Remember, it’s not only important to be aware of these trends (and the opportunities they present) but to take action.
Asset Consolidation—Winner Or Loser?
Global investors currently hold more than $32 trillion in assets, splashed across countless custodians, products and advisory firms. The typical high-net-worth household has five to six providers, each of whom calls that household “our client.” Yet the average advisor holds only about 50% of the average client’s investable assets. LIMRA research says about $12.7 trillion is held by people 55 and over who are still working.
This is truly money in motion: Most of these people will consolidate in the next 10 years. Will they stay or will they go? Where and why? Keep reading …
“Health” Is Here To Stay—Make Room
Covid-19 shocked the world, and everyone now knows their health is at risk. But that was already the No. 1 concern of people 55 and over before the pandemic, and most top advisors have always included health in their conversations with clients. You don’t have to be a doctor, but you do need to probe clients and capture their preferences about where they want to live, how they plan to pay for and receive health care—and who you need to contact in the event they are disabled.
Then there’s mental health. One in four of our clients aged 65 and older is currently suffering a level of cognitive incapacity that prevents them from making good decisions. If you don’t engage with the client and the family about these issues, the family will take the money away. That’s now the No. 1 reason top clients leave their advisors—they either die or become disabled.
What can you do? Keep reading …
Sell Security Alongside Opportunity
Investors have never had it so good. For nearly 12 years, equity markets have been jamming at 18% per year—and bonds at 11%. No wonder clients’ appreciation of advisors is high. But watch out. Clients on the cusp of retirement or already in it remember the years 2000 and 2008. The antidote for insecurity is security. The No. 1 product concept of interest to clients who already work with advisors is retirement income. Not the stock market.
That means retirement is not just about assets—it’s about managing liabilities as well. Most clients don’t have enough assets to get all the way through retirement. They need leverage. And yes, that means adding products to your arsenal, increasing the breadth of your services.
Here’s a prediction: If you are not discussing protected lifetime income with clients, you are vulnerable to competitors who are selling safety. Do not assume clients can estimate a retirement paycheck from a portfolio. There are protection products that leverage client assets for legacy (life insurance), health-care costs (long-term care) and longevity protection (deferred income annuities, single-premium immediate annuities, etc.).
How do you keep track of all that complexity? Keep reading …