At the start of summer, we interviewed financial advisors and leaders at wealth management firms to learn how they were responding and adapting to these unprecedented times as highlighted in our blog post—Many Rivers to Cross: How Wealth & Retail Firms are Navigating this New World Order. Common themes emerged from these conversations including: surmounting technological challenges, maintaining company culture and employee engagement, and staying connected to clients.
As we approach the home stretch of an extraordinary year, we spoke with more advisors to provide a deeper dive into the advisor-client relationship—how it’s been impacted, how it’s evolving, and what advisors anticipate will happen next. Here were 5 key takeaways from our conversations:
1. The only certainty is uncertainty
Everyone can agree there is a lot of uncertainty right now. With no end to the pandemic in sight and economic consequences unfolding in real-time, advisors noted that clients are worried about how market volatility might impact their portfolios and livelihoods. Clients are questioning whether the recovery we’ve seen is real and sustainable or driven by fiscal stimulus and whether they should invest more or reduce their exposure. Further, depending on the outcome of the highly contentious U.S. presidential election, there could be substantial changes to tax law and other regulations that could reshape the advice industry and investment strategies. Clients are turning to their advisors for guidance through this uncharted territory and will continue to do so for the foreseeable future.
2. There are some silver linings to the “new normal”
While 2020 has been a challenging year to say the least, there have been some unexpected silver linings to this new world order. Working remotely has allowed for greater efficiency and productivity by cutting down on commuting time that can be reallocated toward work and family. Remote communication and living through a global pandemic have also injected a more human element into some dialogues. Another advisor commented, “We’ve been asking our clients ‘Hey, how are you doing?’…it’s another call that we’re making. It’s been nice to connect with people on a more personal, vulnerable and human level.” When treated with the proper sensitivity and humanity, the shared experience of living through this once-in-a-century event can help fortify and strengthen client relationships.
3. When it comes to business development, it’s time to think outside the box
The move to a virtual environment has been devastating to in-person conferences and networking events—the bedrock of business development for the advice industry. In the current climate, advisors are seeing referrals and word-of-mouth playing a more critical role than ever in driving new client opportunities. To expand their business development strategy beyond referrals, one advisor explained that his firm is disseminating thought leadership via email marketing campaigns to generate brand awareness and drive engagement with qualified leads. Advisors are also exploring other creative ways to add value at a time when people really need their help. One advisor worked with another bank to help provide Paycheck Protection Program (PPP) loans for clients and non-clients alike. It was a win-win strategy—the loans helped keep people employed and recuperate, and it opened new client doors for the advisor’s practice. In another example of resourcefulness, this same advisor helped a client who runs an in-person team-building events business rethink his entire business model and pivot to a totally virtual events strategy. Going the extra mile with clients and prospects and offering relevant services that address real immediate needs are key to pipeline expansion and growth.
4. Advisors are keeping an eye toward “the next big things”
When we asked advisors what they see as the next big thing for the industry and how that vision is driving change at their firms, they took their answers in a few different directions, highlighting the complexity of the industry and the multiple layers that need to be considered. From an investment strategy perspective, the conversation around sustainable investing is increasing among individual investors and institutional investors alike; it’s a key trend that advisors are keeping an eye on. Another advisor noted that there is constant evolvement in what you’re doing, how to charge for your services, and the industry’s guidance on pricing models. Finally, and more fundamentally, financial services firms (like other industries) are constantly evaluating new technologies to make the remote advisor workstations more seamless. They’re also questioning how long this environment will last and reevaluating their real estate footprint.
5. The more things change, the more they stay the same
One advisor observed that over the last 15 years, the financial services world has seen the democratization of investments that people can buy without an intermediary, resulting in greater choice and fee compression. In an interesting cyclical development, however, the massive disruption and upheaval brought about by the pandemic has been a keen reminder of the value of advice. It’s important that people have a financial professional they can turn to, particularly during times of crisis and uncertainty. At the end of the day, while the pandemic has undoubtedly brought about lasting changes to how we live, work and interact, the advisor-client relationship remains fundamentally unchanged at its core. It’s about finding people who need help, giving them thoughtful and comprehensive advice, and providing stewardship of their assets.
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