How can advisors develop relationshipsat a social distance?
The answer is video. According tomy colleague and pioneer in wealthmanagement communications, FiCommPartners CEO Megan Carpenter, a“video first” strategy in these times ofsocial distancing will be critical to connecting with clients and prospects.
Investors and prospects want to seetheir advisor in these troubling times,
so video communications will be powerful, particularly as newadvice buyers are social distancing and Google searching for a financial advisor forthe first time. Additionally,with the universal proliferation and adoption of videoconferencing platforms suchas Zoom, most investors aremore than comfortable meeting and working with serviceprofessionals via video. Videocommunications are rapidlybecoming the new norm.
Beyond video, just communicating ingeneral is critical during volatile times.Surveys show the No. 1 reason clientsfire their financial advisor is becauseof a lack of communication. Sadly, theresults of recent research from JD Powershowed that advisors were “AWOL” during the pandemic, as two-thirds of investors did not have any communicationwith their advisor. Those advisors communicating and using video will be wayahead of the curve in finding, convertingand nurturing client relationships.
ADDING VALUE IN A WORLD OF FREE
One dramatic outcome of technology’s
rapid transformation of this industry has
been the powerful scale and efficien-
cies that have ripped just about every
cost out of the investment management
supply chain. In fact, now a majority
of investing and financial planning ser-
vices are being offered “free.”
Leading this “free” highway and
low-cost tsunami are the discount
brokerages and asset managers from
Vanguard, Schwab, Fidelity and others.
As these technology players continue
to add scale and find ever more ways to
squeeze tiny basis points out of the dis-
tribution and manufacturing of invest-
ment products and services, they are
disrupting and transforming just about
every aspect of wealth management,
with no end in sight.
This has tremendous implications for
the delivery of financial advice from
“premium” priced providers. Just saying
you offer financial planning and fee-
based advice will no longer be enough to
differentiate yourself, when anyone can
get equivalent and feature-rich services
online and in-person for “free.”
Accordingly, to survive and thrive,
advisors will need to re-position them-
selves as specialists in various niches,
such as those based on client demo-
graphics, investing specialties, busi-
ness owner issues, tax planning and
more, as well as do more behavioral
The good news is that we are alreadyseeing this movement play out, andadvisors are rapidly re-positioning thework they do and better communicatingthe value they provide to clients. Thisshift is similar to how the predicted-to-become-extinct travel agent enjoyed apre-pandemic renaissance for their services, as they pivoted away from sellingdestinations to selling “experiences.”
A ton has already been written about the
“Netflix-ing” of just about every industry
in terms of the packaging of products
and services into monthly subscriptions
that don’t seem as costly when paid for
over time vs. a one-time total purchase.
What this means for wealth manage-
ment is that the traditional practice of
paying for advice, guidance, products
and services through an AUM fee is rap-
idly becoming unbundled into its core
components, which are now
being paid for in new models.
Which makes sense, as
the industry has tradition-
ally given away what clients
value most — financial plan-
ning and personal relation-
ships — while charging for
management. The price-val-
ue alignment under an AUM
model is backwards.
Leading advisors already
are making this move, and the early
experiences of the runaway growth and
success of platforms such as AdvicePay
from Michael Kitces and Alan Moore
provide powerful evidence that this
trend has staying power. This has hap-
pened despite the addictive nature of an
AUM fee the industry has clung to for
There were about a dozen “mega-trend” themes identified in my quarantine research. However, these fourstood out as having the most immediateimpact on how the industry operates,and they provide real lessons for advisors and the industry about what mayseem like small blips on the radar nowbut likely will become massive mountains of change in the years ahead.
Timothy D. Welsh, CFP, is president, CEO andfounder of Nexus Strategy, LLC, a consultingfirm to the wealth management industry. Hecan be reached at firstname.lastname@example.org oron Twitter @NexusStrategy.
Investors want to see their advisor
in these troubling times, so video
communications will be powerful,
particularly as new advice buyers
are social distancing and Google
searching for a financial advisor
for the first time.