These underserved clients are interested in goals planning, it’s just not being offered to them.
“It’s one of the biggest reasons we’ve seen robo move into this marketplace,” Holt said. “Robo-advisor 4.0 will be delivering full financial planning directly to consumers, not just investment advice.”
There is still ample opportunity for advisors to win and keep clients, he said, because when decisions are complicated, or there’s a high cost to being wrong, people tend to look to experts for input to boost their confidence in their decision.
The areas where there is a high cost of being wrong are retirement distribution planning, estate planning, tax planning and business succession, and that’s where advisors can continue to dominate.
“The key here is for the advice community to really double down in these areas,” Holt said. And they need to invest themselves in the things that really matter to clients—relationship, empathy, coaching and guidance, advocacy, meaning, experience, purpose and strategy.
“That is where advice engagement lives. Advice engagement is a brand new concept that’s really been around for 100 years,” he said. “It’s where we, as advisors, prove our value to our clients.”
Things that used to be luxuries for the wealthiest clients are now becoming necessities: That includes the offering of separately managed accounts; ESG; partial share holdings; private equity and alternative investments; fee-only service; fiduciary relationships; family offices; and financial, estate and tax planning.
“All of these things used to be reserved for only our highest net worth clients. We were doing this 20 years ago. It wasn’t easy, it wasn’t cheap,” he said. Now it’s taken for granted that things like direct indexing will be offered, and will become even more so. “Don’t believe me? The proof is in the pudding, because the biggest players are all buying up the indexers.”
Holt predicted that in the next five years, clients will be able to buy all these bells and whistles from robo-advisors.
“If they can buy all this stuff directly, what role do we play? Advice engagement. It’s the guidance. It’s talking about their family,” he said. “It’s understanding their life intimately and then delivering that human value beyond [what] any technology or product solution is going to deliver.”