One of the few effective television commercials for the financial advice industry is Charles Schwab’s piece featuring a baby boomer father and his millennial son. They’re having lunch and talking about how it’s time for the son to invest. He should, of course, talk with Dad’s “broker.” The son has questions, like what’s the cost and does the broker still get paid if Dad doesn’t make money? Dad’s line is the classic rationale, “The world doesn’t work that way.” His (smarter) son schools Dad. “The world’s changing.”
For an industry with so many smart people, I’m frequently baffled by our lack of simple clarity. It’s almost as though we intentionally make things complicated for our clients—and certainly for our associates. Do we think that adds mystery we can untangle for a fee? We often like to blame regulation, presuming that it’s a real excuse. Pause on that for a moment. Some government authority makes us do this thing this way and we haven’t figured out a way to make it easier for you or your advisor, but you should trust that we are really smart about investing your money. Wow.
There’s an old marketing saw that financial industry brochures all have the same 50 words, it’s just that they’re arranged differently. There are certain phrases most likely to stop a meeting cold if someone asks, “So what do we mean by that?”
If we insist on using language not found in the everyday lives of non-financial people, we have to spend time defining these words—in their words.
Here are some of the phrases I’m talking about.
Wealth Management
“Wealth” is relative. Some clients with $200 million act like they’re broke while others with $500,000 think they’re set for life. The most important aspect of being a wealth manager is defining success in the eyes of the client. In other words, to each client, what’s “wealth”—and how does the client define your role in managing it? At a minimum, we need more focus on net worth instead of just assets, and net income instead of just dividends and interest. Real life is a balance sheet and an income statement—the costs for health care and taxes matter a lot.
Can you provide leverage for limited savings by purchasing more death benefit, longevity protection or health care through insurance and annuity products? What about the home equity? Isn’t this all common sense?
Financial Wellness
At one end of the spectrum, “financial wellness” means a holistic approach to clients’ longevity that incorporates the impact of health and health care into their financial plans. But the phrase has been dragged down by some firms to describe a superficial financial plan—which is only a fraction of the holistic health and wealth scope. True wellness is the meaty challenge of successful longevity, planning and preparing for the inevitable life transitions of where you live, how you finance health care and how you get around. The preparation for this is woefully lacking among aging baby boomers, so watch wellness take a leading spot among considerations.
Artificial Intelligence
This one is more for the corporate managers out there. It is neither intuitive nor universally accepted that more data will make life better for a firm’s clients or its employees. An advisor should spend more time understanding the benefits—again, starting with the basics first: AI can help identify an advisor’s “next best call,” but someone has to make the call. And the data has to be used for good purposes that have an immediate impact on clients and improve advisors’ ease of doing business. AI can remind clients to take their required minimum distributions, update their retirement plan beneficiaries, populate forms and facilitate smoother transfers and money movement. Don’t wait for it to split the atom. And be very aware that any new procedures that replace human effort may be interpreted by some clients as your firm becoming less “personal,” when of course the best intended uses of AI are to make sure you are more thorough and consistent.
Worse, some employees may fear talk of AI and further automation because they hear “cost savings and head count reduction.” Be smart about AI and tech spend overall by focusing your attention on exactly what will be better, by when and by how much. And make sure everyone knows the positive impacts on them.