Delivering Advice for Life
Financial Advisors face headwinds as technology continues to disrupt the traditional advisory value proposition. As more information and tools become freely available online to retail investors, advisors are once again challenged by how to add value to their client relationships.
In the past, advisors competed for client assets. Today they contend for assets plus client data and information. Nearly every advisor uses expert financial planning systems, or FinTech, with interactive features, promoting collaboration with their clients. Historically, advisors were the primary source of data and information for clients. Today, much of that work is offloaded through FinTech. In fact, with data aggregators and “vaults,” every advisor is positioned to be “the” advisor who can best show the client their entire financial picture. As these services reshape our industry, advisors must, in turn, adapt their mindset and business models. But how do advisors compete and differentiate themselves when products are commoditized and digital, consumer-friendly planning tools are readily available?
While a few FinTech applications specific to a single complex life event are available directly to consumers, a sole source of truth that includes the situational context of the client does not exist. Additionally, from an advisor’s perspective, FinTech has evolved to advance the advisor’s ability to help clients reach goals such as education planning and retirement planning. However, these often “fixed” goals include “fixed” meanings with finite end dates like “first day of college” or “last day of work.” Life is not always that clean and simple. In fact, life is far more complex than in previous generations. Consider, for example, the financial havoc of a divorce when the couple owns a business or has a blended family with interwoven beneficiaries. The more complex a client’s life, the greater the need for practical wisdom from their financial advisors. Herein lies the opportunity for advisors to separate themselves and create new profitable business models that can transform our industry.
Advisors put themselves in a more competitive position to deliver valuable practical wisdom to their clients and prospects when they think through and prepare for various complex life events, create client checklists, and prepare critical questions for clients to consider. At times of high stress, clients seek competence and compassion for their situation. Having collateral, prepared materials, or “kits” for the most common life events clients will face provides easy reinforcement of your value. In order to maintain your client’s trust, these event kits do not need to have a direct connection to the products and services you offer; they need to be relevant and helpful to the client’s situation. Early adopters who focus on consumer outcomes will create immediate separation.
Advisors should ask, “Am I ready to help clients deal with the events in their life in a way that helps them regardless of portfolio implications?” If not, they can expect to be leap-frogged yet again by innovative competitors whose best prospects are the advisor’s current clients.
For more information on how Advisors can learn to help clients address various life events, click here to read the whitepaper by Cannon Financial Institute’s William Trigleth.