Back in the 1980s, when I was start- ing out, stock brokers had a secret weapon — Quotron machines displaying the most recent stock ticker prices.
Knowledge was power for the most skilled
advisors, many of them 20-something-year-olds who had
come from sales training programs at places like IBM and Xerox.
Today, financial advisors bristle at the term broker. Today’s
“beginners” are often twice as old and prefer to think of themselves as consultants, not mere salespeople.
Thanks to the internet, anyone can find a stock price or invest
cheaply with ETF funds. And now so-called robo-advisors offer
strategic investing ideas based on age and goals, making some
wonder whether the profession itself is headed for the ashbin of
history. Where once the profession evolved, is it now dissolving?
“Before the argument was that the internet would kill FAs,
now it’s that robos will. Both are false,” said Michael Kitces,
publisher of the blog “The Nerd’s Eye View” and partner of
Pinnacle Advisory Group.
Advances in technology will continue to enable advisors to
service clients more efficiently.
“Imagine if it took advisors only five minutes to open an
account, 10 minutes to rebalance and no time at all for quarterly reports because all the information was available online.
How much time would advisors save in one year or even five
years?” asked Kitces.
Evolution remains the byword for advisors. Today, they are
holistic financial planners who help clients prepare for retirement, create college savings programs and even do household
budget projections. They have a long menu of products and
services to help clients implement their programs, including
insurance and lending services.
The Super Advisor
“Clients want one-stop shopping,” said Michael Silver, managing partner of Focus Partners, a practice management consul-tancy for financial advisors and financial service firms.
One-stop shopping has an added benefit: Industry studies
reveal that clients are more loyal to FAs
who offer a more complex array of prod-
ucts, Silver points out. In sales lingo, those
clients are stickier. “Advisors should want
to create a stickiness factor,” he said.
Focusing on goals has another advan-
tage: Investment performance is no
longer the focal point. Client meetings
center around financial planning needs
that take into account a client’s shifting
life circumstances, including inheritance,
buyouts and expenses tied to children.
Therefore, advisors in client meetings
should always ask this question, Silver
said: “Is there anything going on in your
financial life that I need to know about?”
It’s all part of how successful advisors
position themselves as indispensable in
their clients’ financial lives, he explains.
Advisors these days strive to build multi-generational
client relationships and often prefer fewer but bigger clients,
Going forward, advisors should be gravitating toward more
and more specialization, according to Kitces, which is a natural evolution. He notes that the advisor’s business model has
evolved from stock-picker to asset manager to financial planner.
Advisors have always been scrambling to stay one step ahead of
technology and what clients can do themselves with technology.
“The next 20 years will be an age of niches and specialization,” explained Kitces. From 2000 until now, the number of
advisors seeking the Certified Financial Planner certification
grew from under 40,000 to almost 80,000.
Today, the CFP designation alone doesn’t make an advisor
stand out. To make that happen, many are seeking post-CFP designations, like the Retirement Income Certified Professional (or
Today, no one machine — neither a Quotron nor a robo —
can fully serve clients. Successful advisors understand how the
world has changed and are anticipating what lies ahead.
Mark Elzweig is an executive recruiter who has worked with advisors
at wirehouse, regional and independent firms for three decades.
Advisors are a nimble bunch, which means they
can keep offering clients more broad-based
services that meet their particular needs
By Mark Elzweig