Advisors can turn to artificial intelligence to stay employed longer, but many of them will become mere adjuncts serving the technology, which will be commoditizing whatever unique financial services and products they offer.
With more demanding clients, technological advancements and commoditization, the core issue is: “What value does a financial advisor provide his or her clients?”
The Human Element
More than financial expertise, the financial advisory industry is already much more about the human element. Going forward, this will play an even bigger role.
The human element is the psychological and emotional component of financial advising—what allows financial advisors to truly connect with clients in order to determine what sincerely matters to them. It is about delivering exceptional value in accord with the wants, needs and preferences of clients. That means understanding how the various financial strategies and products impact the people involved. The client agendas should determine the ways technical proficiencies are brought to bear.
The human element is already a critical differentiator among financial advisors, and it will become the only differentiator eventually.
It also entails being able to effectively communicate with clients—being empathetic and then expertly framing concepts and recommendations.
The human element, just like technical expertise, can be learned. While certain psychological attributes such as a deep curiosity and real concern for others should be part of the psychological makeup of financial advisors, the micro-skills and methodologies that produce strong rapport can be studied and mastered. These things are essential in building meaningful financial advisory practices.
Stress-Testing
With the super-rich, it’s important to stress-test advisory products and services—to understand and evaluate them in a systematic way to make sure they will hold up in different scenarios and deliver the expected results. This is important for advisors looking to work with more affluent and accomplished clients.
Take, for example, a billionaire family that had all their wealth planning tested. A team of specialists, under the supervision of a coordinator, was brought together to conduct the evaluation.
Quite a number of faults can be unearthed this way. Some of these faults will be technical. Sometimes the plans have become dated. Or sometimes the professionals did not accurately understand what the family wanted.