A dozen years ago we sold our national advisory firm to GE Financial. Since then we've built another national RIA. It's a very different firm than the last one, but it had to be because the world, and our industry, is quite different than what existed before.
Here are some of the biggest ways in which our world has changed and the implications for all of us, and some questions we should all ask ourselves from time to time:
Clients have different expectations from their investments and their advisers
Years ago few clients had experienced a major market decline, but since then there have been two 50% declines in the S&P 500, and we are living in an unimaginably low interest rate world. As a consequence, most investors have come to expect less from their investments and have learned that advisers can't deliver excess returns if the markets don't collaborate. This has created a discussion about what the primary value of a financial adviser is, as well as some disillusion with our industry.
Communication has become omnipresent
At the beginning of the last decade, clients were satisfied with a quarterly (or at most monthly) performance statement delivered a few days after the end of the quarter. TV, newspapers and adviser updates were the primary source of financial information. Today clients expect their portfolio updates to be available immediately and in multiple formats. They are given multiple streams of conflicting information via the Internet and various social media platforms. Our job has changed from providing information to helping investors decipher and personalize all the information available to them.
Every firm is a “wealth manager”
The major shift in the late 90s was to become a fee-based financial adviser. Over the past decade everyone says they are a “wealth manager,”from the large brokerage firm to the independent regional practice, to even boutiques. The term has become ubiquitous. But surprisingly, while many call themselves wealth advisers, they are still primarily delivering investment advice that is similar to what was offered to clients a decade ago. The difference? A wealth adviser helps their clients manage their entire financial life, not just their investments. There is a growing movement of firms that have broadened and deepened their service offerings for clients.
Competition from above and below
Early on in the new millennium we all worried about the competition from accounting, insurance and law firms. Brokerage firms were expensive and conflicted thankfully. Today large brokerage firms are all open architecture and charge about 1 percent for a managed account, custodians market directly to our clients andconsumers have investment advice available online at absurdly low pricing. Geography has become less important (communication has made the nation smaller) and clients are happy to work with an adviser anywhere in the country.
Certainly change will continue, so has your firm evolved? Here are some questions every adviser needs to be asking themselves:
1. How have we evolved our firm compared to five years ago? How have we improved the client experience, the services we offerand ourstaff structure?
2. What is it we really charge for? Do we consistently deliver it?
3. How are we making ourselves competitive in this different environment?
4. What would attract an investor to our firm,compared to all of the alternatives they have?
Answering these questions led us to build a very different company this time around.It might lead you to evolve differently, too.
Joe Duran is chief executive of United Capital and the author of “The Money Code: Improve Your Entire Financial Life Right Now” (Greenleaf Book Group Press, 2013).