Back to the Future (Wealth Advisor): Where Will You Be in 5 Years?

Nov 17, 2016

roubini-coverEarlier this year, Roubini ThoughtLab teamed up with SEI and other leading wealth industry firms to conduct a study, Wealth and Asset Management 2021: Preparing for Transformational Change. It looks at the changing demographics of wealth, from boomers to millennials, with very different needs, behaviors and ways of communicating. The study suggests that over the next 5 years, the impact of 5 megatrends “will be profound.” Over the last few weeks, each of us at Practically Speaking has taken at look at those megatrends. This post, wrapping up our series, looks a trend that will affect all of us – megatrend #4: The future wealth advisor.

Look at what is going on right now – we have a new DOL rule that will change our business, fees and fiduciary are being discussed more than ever, and the robo advisor business is pivoting to virtual advisors (robo front end and technology, but human “call centers” for limited advice). We are seeing change in the industry – and not just change in products and services or in meeting the needs of those boomers as they age. I would argue we are seeing structural changes to the way advice is given (and paid for). I think we are at an inflection point in our business that will fundamentally shift how advisors do business going forward.

Even 5 to 10 years ago, the advisory business was made up of three types of advisors:

  • Larger firms (typically the wire houses)
  • The independent but broker-dealer-affiliated rep
  • The fee-only RIA

For the most part, these three groups competed for baby boomer dollars by offering advice and investments. The firms grew in AUM as the boomers reached their peak earning years and began to retire. In reality, those firms all catered to the same clients, with the same needs of retiring, for the most part, the same products at about the same costs. The clients are changing, the needs are changing and access is changing – it only makes sense that the advisors and their business models must change, too.

Back to the future (wealth advisor): Where will you be in 5 years? Click To Tweet

Megatrend #4: The future wealth advisor

The Roubini report suggests that advisors who want to stay relevant in their role must adjust by becoming “hyper-responsive, highly empathetic and digitally savvy.” The focus of the advisor should be to become a “multidimensional professional, able to provide both specialized advice and live goal-planning – always keeping their clients’ best interest in mind.” Sounds like a very difficult task for today’s advisor, who is probably focusing on active vs. passive investing or which variable product has a better guarantee income rider.

For those of you who want to build or grow the business, the Roubini report outlines the future successful business – “the general practitioner, who can call on a cadre of specialists when necessary.”

When you look at your business (and its future), ask yourself:

  • Have I built something key-person dependent, or it is an enterprise business?
  • Am I focused on client needs or does “running the practice” take away from my responsiveness?
  • Can I document my own “superior advice” (or do I have those specialists in place)?
  • Am I investment or advice focused?

Download the report. Look at all the megatrends, but focus on what your business will need to do to survive and thrive 5 years from now. As I said, I think we are at an inflection point. What you decide today is going to have great impact on your business of the future.

Download the study, Wealth and Asset Management 2021, for more on this megatrend.

Previous megatrend posts on Practically Speaking:

Are Advisors Ready for “The Big Shift”? (Hint: You Better Be)

The Drive to Digital: Make it a Road Well Traveled

By Popular Demand: Why Consumers Will Change Advisors’ Product/Market Approaches

Preparing for What’s Next with the Rapidly Evolving Investor

Share Button
John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

Learn More About John Anderson



HNW Whitepaper

Recent Tweets