Since the 90s, the financial services industry has steadily grown to meet ever-changing client needs, and witnessed its financial advice model evolve from stockbroker to investment consultant to wealth advisor.
Advisor/client relationships have been challenged by the double threat of "robo-advice" and DIY investing via low-cost index managers, and while both of these options remain (and have even grown), the pandemic made it clear that the market for financial advice delivered by an actual person remains not just vital, but necessary. Increasingly complex financial products require the guidance and knowledge of experienced financial advisors, especially when pursuing the financial goals of the high-net-worth (HNW) or emerging HNW clients.
Winning relationships in today’s environment is less about retirement accounts, investment portfolios, and mutual funds, and more about building relationships and answering the questions of clients and prospective clients -- questions like “Is our financial situation going to be okay long term?” and “Are we making the right decisions right now?" Helping clients confidently answer those questions will allow any advisor to win and build relationships.
Possessing or adding robust financial planning capabilities to an advisory practice are no longer “nice to haves” in this modern environment, they’re essential.
Here are three reasons advisors should consider adopting a financial planning mindset and continue to invest in technology-driven solutions that can help them boost their existing financial planning capabilities and provide clients with peace of mind.
According to research conducted by the CFP Board [1], only 24% of adults receive retirement planning advice from a financial professional (62% do not and 10% don’t know or have no opinion). Of those who receive retirement advice, 88% say they have benefitted from this service, including 60% of adults who say they have definitely benefitted.
Providing clients with a structured investment strategy or plan makes sense, as it helps make financial concepts tangible and provides an essential touchstone for clients during market declines or periods of increased volatility. Ultimately, a plan gives a client benchmarks and helps them understand how their portfolio is performing against those benchmarks as they strive to achieve their long-term goals, all of which can strengthen your relationship by helping them see the value you bring to their financial life.
According to Cerulli, “The most successful firms in the wealth management space are those that add value beyond the realm of investment management. Providing [expanded services] can set firms apart by not only improving the client experience but also by building relationships across generations.” [2]
Expanding one’s value from investment advisor to managing a client’s financial wellness may mean helping a millennial client get a handle on their student loan debt in the morning and then spending the afternoon assisting a Baby Boomer client with estate planning with special emphasis on tax planning. Personal finance and investment decisions are no longer distinct disciplines, but rather components that need to be coordinated in order to best promote a person's overall financial health.
The topics on which the advisor is expected to consult can be incredibly varied and complex: from asset management to life insurance, and from helping set a client's risk tolerance to determining how much long-term care insurance they may need as they move into retirement.
However, the advisor’s expanding role and its challenges are infinitely addressable through the application of technology. Technology makes a vast array of expertise available to the advisor, allowing them to deliver guidance on topics they previously couldn’t. The evolving advisor positions themselves between client and capability, orchestrating the financial planning process.
Nothing is more representative of the power of affordable technology than the smartphone, a tiny computer we carry around with us at all hours of the day. As Arthur C. Clarke once wrote, "Any sufficiently advanced technology is indistinguishable from magic."
Likewise, some of today's fintech solutions at the surface are very easy for even the most novice investor to use, but come with real-world financial implications if not understood. And even with the abundance of technology to make investing, trading, and planning available to investors with the tap of a screen, many investors continue to seek a trusted advisor—their genius bar—with whom they can validate their financial thinking or to whom they may delegate their financial planning entirely.
At AssetMark, we’ve seen a lot of advisors employ a lot of financial planning software in their practices. At their best, this technology is less about any particular capability and more about discerning what is important to clients and helping them see how they can plan to achieve their goals. In essence, the advisor uses them to build build a client’s financial confidence and strengthen the relationship, which pays a lot of dividends in terms of retention, referrals, and the sense of satisfaction one can achieve by helping a client build a better life.
At AssetMark, we believe there is a place for tech-savvy, client-centric advisors to meet clients on their terms, use cutting-edge financial planning technology to help them understand their goals and challenges, and then orchestrate multi-dimensional solutions to those challenges over time.
That's what the continued evolution of financial advice/financial wellness is all about and why we continue to look for ways to help advisors and their clients better meet their challenges head-on.
See how partnering with AssetMark can unlock the tech-driven financial planning capabilities today’s evolving investors are seeking. Download our latest guide to learn why expanding your offering can be a key driver of your success – and why you should act now.
Looking for opportunities to add or improve the financial planning capabilities you deliver your clients and prospects? AssetMark would like to talk to you. Schedule your consultation.
[1] Source: Certified Financial Planner Board of Standards, Inc. April 2019. CFP Board Retirement Presentation. https://www.cfp.net/-/media/images/cfp-board/cfp-board-images/reports-and-publications/cfp-board-morning-consult-retirementpreparednesssurvey-2019.pdf?la=en&hash=ECC8C62E12723B392647015C2FB76908
[2] Source: The Cerulli Report. U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2020 - Implications of Wealth Concentration. https://portal.cerulli.com/reports/us-high-net-worth-and-ultra-high-net-worth-markets-2020