The financial industry of our forefathers was dominated by large, established firms focused on delivering traditional investment management and, later, financial planning services to the wealthier end of the market.
Today's advice profession couldn't look more different.
Our profession is undergoing a seismic shift fueled by a surge of new technologies, shifting consumer demographics and evolving service expectations. Adapting to these trends amid fierce competition for market share, top-performing advisory firms are responding to these trends by future-proofing their practices.
Changing Demographics And Growing Demand
Financial advice is a lifelong guide, steering us from cash flow management to retirement planning and estate transitions. With the rise of younger generations and longer lifespans, it's clear that the way we deliver financial guidance must adapt to ensure that firms can be effective and profitable in providing tailored services and personalized advice throughout a client's life.
Today's consumers, including younger and affluent ones, are reshaping business models and fee structures, moving beyond traditional AUM fees. They're asking for advice that resonates with their own financial reality and dynamic needs.
Research shows that consumers across every segment increasingly want holistic services and advice on non-financial topics such as longevity, relationships, legacy and well-being to complement their services.
Firms need to increasingly invest in and rely on technology to deliver hyper-specialized services at scale, freeing advisors to focus on the human side of the advice experience.
In essence, the future of financial advice lies in a firm's ability to differentiate itself in the marketplace by meeting the specialized needs of clients in an efficient, economical way.
Let's explore two trends reshaping today's advisory firms and one tactic you can use to future-proof your firm.
Taming Technology
At the same time that consumer demographics are shifting, new technologies are rapidly revolutionizing the advisory landscape. This has enabled firms to streamline operations, enhance client experiences, and boost productivity in ways unimaginable a mere decade ago.
Imagine then what the future holds. Tech platforms, automation and AI are simplifying complex processes, increasingly allowing advisors to focus on personalized financial advice.
Technology has become the great equalizer, leveling the playing field for smaller firms and supporting scale for larger ones. Technology is changing how financial advice is accessed and delivered, expanding affordability and access for current and new market segments.
As consumer expectations rise and new business models, fee structures and service offerings emerge, continuously investing in and leveraging your technology stack will be key to delivering deeper service levels, optimizing productivity and protecting margins.
Service Systems As A Future-Proofing Strategy
We often hear about the threat of fee compression, but the real challenge for today’s advisor firm is service inflation.
Today's consumers desire more holistic, integrated and comprehensive services from their financial planners. Every segment of consumers increasingly seeks non-financial advice related to health, lifestyle and relationships. These shifts don’t just squeeze time; they squeeze profits as advisors strive to offer more service and value to justify their fees.
Covid-19 intensified this by triggering a global evaluation of the interplay between work, wealth and well-being. An additional 1.2 million people retired in 2021, and many are seeking financial advice earlier, further fueling demand.
Typically, advisors prepare for client meetings by reviewing CRM notes from previous interactions. Yet, every meeting is different, bringing customized attention to even the most mundane activities, leaving advisors and their staff in an endless game of whack-a-mole. Multiply this by hundreds of meetings annually, and the challenge becomes overwhelming.
How can advisors adapt to these changes and offer deeper, more efficient services? The answer lies in creating a hyper-efficient “service system.” This involves clearly defining client types, what they receive and the processes to deliver these services efficiently. Once foundational services are established, you can enhance them with tailored offerings linked to a structured sales process.
A systemized service model optimizes productivity and protects margins. Think of it like a tiered cake:
• Standard Services: Basic financial planning services that can easily be standardized.
• Special Services: Automated delivery of specialized services for specific client segments.
• Personal Services: High-touch advice personally addressing client situations and concerns.
The standard tier covers essential services that can be delivered consistently across all clients. Specialized services are then layered on based on client needs, and personalized attention is reserved for addressing clients’ most pressing concerns.
Using automated processes to deliver standard services also surfaces issues that require the advisor’s attention. This approach ensures that clients receive personalized service, even though much of the work is automated. For instance, an advisor might automate checking Roth conversion eligibility for clients, prompting those who qualify to schedule a meeting. This removes manual checks while delivering timely, personalized advice.
For niche advisors, the specialized layer becomes hyper-specialized, delivering services that meet the specific needs of their client base. Advisor firms with more general practices may need to create multiple workflows to efficiently serve different client segments.
The personal tier of the service model focuses on what is personal to the client at the moment, ensuring their immediate concerns are addressed. By automating standard and specialized services, advisors have the time to provide this personalized attention, making every client interaction more meaningful.
Focus-Forward
With the right tech stack and structured service model, advisory firms of any size can deliver highly specialized services, deepen client engagement and personalize the client experience while optimizing efficiency and economics.
Stephanie Bogan is the CEO and consulting leader of Limitless Advisor Coaching. Join #MondayMojo blog for quick insights to elevate your work, wealth and well-being at LimitlessFA.life. Join her Nov. 14 webinar to learn the framework that helped Michael Kitces 10x his growth.