Cannon Financial Institute

Mega Trends We Cannot Ignore #1


Welcome to my latest work helping Cannon to forecast mega trends.  Mega trends are complex because they are at the confluence of multiple variables each exerting pressure in different ways and at different times to coalesce into a broad trend that has enough momentum that it will be with us for a significant amount of time.

We look for these and study them because they are where our industry will need our help and services over the next several months and years.  Mega trends do not negate the need for specific situational help to address contextual challenges faced at the segment or organization level.  In fact, helping craft solutions in this domain for our clients is a traditional sweet spot for Cannon.  However, we also must be mindful of mega trends and the implications and consequences of those on our clients and our industry in order to help each other remain viable.

In upcoming posts, I will address 6 Mega trends we are following.  We are contemplating crafting white papers on several of these, so if you have an interest, don’t be shy about asking for more information.  Please remember these trends are what we see from our perspective as important to observe and explore.  We are interested in your thoughts and comments about the trends or potential responses to them.

The trends we are watching are:

  • Tenured Advisors, challenges and opportunities
  • Broker Dealers helping advisors build better fee structures
  • Wealth Management teams serving the high and ultra high net worth
  • Regulations and risk management driving outsourcing to a common platform
  • The ubiquity of information and how Advisors incorporate it into their value promise
  • The “Rise of the Expert” and absorbing experts into your business model

Let’s begin our trend assessment with Mega Trend #1

There are several options for advisors as they enter their new phase of life: Keep the practice growing, Sell their practice, or Move to a lifestyle practice. Each has positives and negatives.  No matter which option they elect, they need a succession / business continuation plan that matches both the plan and the unexpected inability to complete the plan.  They need these plans for the inevitable time when no matter the desire, it is in the client’s best interest to transition the relationship.

  • They owe it to the clients
  • They owe it to their family and estate

Of course any succession and continuity plans must accommodate the need to deal with the ongoing change.  The current underlying assumptions that support most advisors current business models have shifted significantly and are no longer as relevant as they were when these tenured advisors came into the industry.   The evolving value propositions available from our industry are dramatically impacting customer options, and payment choices.  External influences are shaping consumer preferences and changing the ways they expect to access and interact with advisors.  This requires thoughtful examination of the business model for the next 10 years, the period most Advisors will need to bridge, before a necessary transfer strategy will most likely occur.

This implies even those most successful now will need new skills to become counselors that leverage their wisdom creating that wisdom as the new value proposition for their clients.  They will also need to adapt these new skills and use those to mentor and support new advisors coming into their practice.

Changes in the nuance of the Advisor-Client relationship will become critical to keeping the practice viable.  Advisors will need to connect with all the family members while being able to meet their communication style and modality preferences.  The good news is other megatrends will easily help them craft a 1-to-1 client experience, but the advisor will need to move beyond a 1-dimensional client experience approach, something very new in our industry.

Tenured Advisors:  The bulk of our industry’s advisors are 55+, and they are facing a transition without a road map similar to the general population they are serving.  They are seeking to answer how to transition along with their peer clients into a new phase of their life. They need a plan around if and how they stay engaged in the business.

Advisors must also must adopt and absorb the new technology changes that are available:

  • CRMs with workflow management, is a requirement
  • Website Sandboxes with scenario modeling, collaboration, wealth aggregation, and consumer education, are now requirements.
  • The client experience has to move past simple face-to-face meetings once a year or once a quarter and reconfigure that approach to being available 24/7 virtually and leverage emerging Big Data capability sets so predictive analytics can be engaged to anticipate needs based on behavior patterns.
  • Advisors will need to leverage the technology to build multiple business models within their practice that match the emerging customer segments that are replacing the Baby Boomers, which were the 900lb gorilla, but are now being joined by 3 or 4 other similar sized gorillas.
  • They need tools and critical thinking skills to identify opportunities, assess risks, and create practices that are relevant and meaningful to them, as well as their client. This is the compelling burning issue for tenured advisors. They have been doing the same thing the same way for 30 years, and it would be natural for many to become burned out. They need to be reinvigorated and reengage in ways that keep them motivated and passionate.

In our next installment of 6 Mega Trends We Cannot Ignore, we explore how broker dealers can help advisors create stronger alignment with emerging customer preferences and expectations from advisors.  This adds both value from the broker dealer and increases transparency of pricing in ways that resonate with the advisor and their client.

Please don’t hesitate to comment, post your thoughts, pass along this information, or call to discuss your situation and what response might create an advantage for you!

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