Of the more than two dozen whitepapers we’ve produced over the last six years, Advisory Firms in 2030: The Innovation Imperative, has sparked more conversations in the first two weeks since we launched it than most have in total. Why? I believe we’ve expressed a wakeup call for advisory businesses that want to be relevant 10 years from now.
We launched the paper at the 2019 annual FPA conference in Minneapolis, but the idea for the Innovation Imperative paper began in May with a brainstorming session that included representatives of the Financial Planning Association® (FPA®), and SEI. I vividly remember sitting in a hotel lobby as we shared ideas and opinions about the evolving business of advice, and whether advisors were preparing themselves for the future. We discussed what services could be added, how marketing would change and the role of technology.
Our discussion prompted us to move forward with a research paper that looked how advisors can plan for today’s changing consumer. We’ll follow up with “micro papers” that dig deeper into a few concepts.
Takeaways from our Innovation Imperative paper
Consider some of the highlights our research uncovered:
- A majority of advisors selected “offers financial or life planning” and “fosters personal connections” as a differentiator of their business. Frankly, that is not a differentiator nor is it scalable in the future.
- Most advisors don’t consider millennials as “ideal” clients; millennials came in second-to-last in the survey, just above celebrities and athletes. Even though this generation is huge and households headed by millennials earn more than other generations did at the same age, most firms haven’t created pricing or service models to support them.
- Advisors still segment according to what is important to them, not their clients. Advisors don’t focus on niches, services models or the efficiencies that can come with them.
- Most advisors don’t have a plan.
You can read more of the findings but I imagine you get the point. Most advisors are not prepared to serve the customer of the future.
Press coverage for our viewpoint
A recent article in Financial Advisor Magazine, Financial Planners Could End Up Like Mall Retailers, really captured the essence of the conversation that we had both in the hotel lobby in May and in Minneapolis. Today’s consumer expects to be offered choice, personalization and transparency. Advisors have to offer those to compete -- or go the way of some of those mall retailers that are no longer in business.
Other press coverage we’ve received includes:
- Financial Advisor Magazine: Experts Tell FPA Attendees They Need Better Long-Term Plans
- WealthManagement.com: Report: Planners Fall Short of Making Plans Of Their Own
- CNBC: Financial advisors need to change to succeed in the next decade
- ThinkAdvisor: Financial Advisors Are Failing to Plan for the Future: Study
- InvestmentNews: FPA study: Financial planners don't plan for their own future
- Financial Advisor IQ: Most Advisors Are Thinking Short-Term; Here Are Some Tips to Grow Your Business Over the Next 10 Years
- Wealth Professional Canada: How financial advisors must pivot to succeed in the next decade
We’re getting started on the micro papers today. We’ll look at how the advisory firm of the future will grow and staff up, and how to better understand the evolving consumer’s perspective. In the meantime, consider also downloading our earlier paper, Advisory Firms in 2030: The innovation imperative. Our research can help you evaluate where your firm is today and whether it’s prepared to stay relevant the future. I believe our newest paper serves as a wakeup call for advisory firms about the need to adapt -- and I hope you answer it.
The FPA® is not affiliated with SEI or its subsidiaries. The FPA® and SEI jointly conducted an online survey in August 2019 with 436 financial planners.
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