The changes that firm leaders are making in response to the COVID- 19 pandemic will be feltfor years to come.
As with other segments of our societyand economy, COVID- 19 is changing theindependent advisor business. To determine how — and how much — in earlyMarch, our firm launched an ongoingsurvey to track behavioral changes inthe industry within advisory firms inresponse to the pandemic.
With a data set of 251 responses sofar, the 2020 Herbers & Company Cultureand Client Service Study finds that, ina short period of time, COVID- 19 hasbrought about transformations in theway advisory firms operate and servetheir clients and how leaders make decisions. Here are our key findings:
1. Financial advisory firms are prioritizing
operational procedures over innovation
We found that 78% of firm ownersare putting their primary focus onrevamping and expanding their firms’operational processes and design. Byfocusing their now “virtual teams” onoperations, advisory firms are cuttingcosts by streamlining operations toexpand profitability.
In addition, we found that 59% ofthe firms surveyed reduced overheadexpenses and decreased shareholderdividend payouts, to maintain profitability. At the same time, we found thatless than 2% of the firms surveyed laidoff any staff or employees.
As for marketing, less than 6% of
firms hired any extra help, and only 7%
are conducting marketing campaigns to
attract new clients during the past two
months. The firms in our study respond-
ed that they have moved their focus to
organic growth programs, generating
Taken together, this means mostfirms are prioritizing: stabilizing theirbusiness, expanding their services andimproving on those services.
As for innovation, 12% of firm leaders are creating something new fortheir firms. What they are creating,which seems to be under “lock andkey” for some, is still unknown. Whatwe do know is that a surprising 10% offirms surveyed said they are turning toan “innovation mindset,” rather thana “growth mindset.” Or, put anotherway, these firm owners are focused onmaking their businesses better, ratherthan bigger.
2. Advisors are focused on expanding
client experience. Today’s firm owners
are reformatting strategic plans, with a
focus on client service programs.
Once leaders stabilize their businessesto the point where they are runningsmoothly under the new circumstances,they are looking toward upgrading their“client experience” to address a new setof client needs in the current crisis. Thisinvolves more client contact and “handholding” within the digital environment.
This isn’t much of a surprise. Withfears about the pandemic, the economyand financial markets, clients need asmuch reassurance and handholding astheir advisors can provide. We foundthat most firm owners are aware of this,and along with their staffs, are expanding their “client experience” to includemuch more contact, information, access,and timely responses as possible.
4 Reasons Why There May Be No Turning Back
Structural changes taking place to serve clients today could be positive andcontinue long after the pandemic ends.
Our survey findsthat COVID- 19has brought abouttransformations inthe way advisoryfirms operate andserve clients andhow leaders makedecisions.
THE FAST TRACK
By Angie Herbers