The future looks very different

The financial 
advice industry's 
next generation 
of leaders 
imagines what 
lies ahead

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The future looks very different

The financial 
advice industry's 
next generation 
of leaders 
imagines what 
lies ahead

By Evan Cooper — August 19, 2017

What's next? Is the past prologue?

The hunger to know our future is woven into human DNA. In the financial advice business, particularly at this time of great change, that need is acutely felt.

For a uniquely informed perspective on where the advice profession is heading in the coming decade, InvestmentNews assembled leaders from among the next generation of advisers and other key industry participants in New York in June for an event called “The Future of Our Business by the Future of Our Business,” sponsored by Fidelity Investments.

(More: Assessing the future of the financial advice industry)

The gathering included 37 alumni representing all four classes of the InvestmentNews 40 Under 40 project. As winners of that award, these young advisers from firms of all types were identified as exhibiting notable accomplishments, contributions to the industry, leadership and promise. They are helping shape the profession today, but are also forward-thinking — ahead of the curve. In addition to advisers, other 40 Under 40 alumni at the event hailed from technology and practice management firms providing services in the advice ecosystem. They play a key role in the innovation that supports the industry's future.

Through a series of strategic think-tank discussions and exercises, participants were tasked with addressing some of the most important issues facing the advice business — and offering their views on what's coming next.

(More: 10 bold predictions about the financial advice industry's future)

Attendees were split into eight teams based in part on results of personality tests given before the event. Teams were composed of similar numbers of diverse personality types, helping to insure the results represented a balance of all participants.

After presentations about the state of the wealth management business by InvestmentNews Research staff and David Canter, head of the registered investment adviser segment of Fidelity Clearing & Custody Solutions, the teams broke away to discuss the client, adviser and firm of the future. Following each discussion, the teams reconvened to present their observations and outlook to the entire group.

The distillation of the core insights and broad forecasts of the groups regarding the client, adviser and firm of the future appear here. We conclude with a look at three broader emerging issues that will shape the environment in which financial advice is given 10 years from now.

Adviser of the future
SAGACIOUS: Smart, of course. But in a world where computers will handle all the details and even the investing, the must-haves for the human will be judgment and wisdom, plus a dollop of shrewdness. UNTETHERED: With mobile technology, video and 24/7 digital access erasing distance, “local” advisers can be physically located anywhere.
NODE-ISH: Advisers will be the aggregator and hub of all things financial in a client's life: investments, bank accounts, mortgages, insurance, work retirement plans. JUGGLER: Relentless cost pressures and greater reliance on technology translate into advisers managing more client relationships (perhaps 3,000). Currently doing 10 things at once? Try 50.
EDUCATOR: A woeful lack of financial literacy afflicts our nation. Education will become a key component of the future adviser's role as the job evolves into a more-mature profession. OPPORTUNISTIC: Savvy advisers will use the shrinkage of the adviser pool to their advantage by prospecting high-quality clients and serving a broader range of needs through varying levels of service.
Client of the future
MOBILE: Not only will mobile devices dominate communication, clients themselves will embody mobility in their work, living arrangements and leisure. DEMANDING: Having access to so much information themselves, skeptical clients will expect specialized — and demonstrable — knowledge and skills from advisers. They'll want it fast, and at a good price.
DIVERSE: Americans are changing. Most retirees in 2047 won't look like the country club couples strolling sunny beaches in today's wealth management retirement ads. HENRY: High-earning, not rich yet. These people have the greatest need for “advanced” planning, and firms will adjust to make serving them profitable.
VALUES-DRIVEN: Clients will increasingly want their investments, bequests and businesses to align with their personal beliefs.
Firm of the future
AFFILIATED: A one-person firm now can be as effective and attractive as a global firm if it uses well-respected brands for key functions. Giant firms that do it all will also thrive, perhaps with thousands of salaried advice providers. BRICKLESS: Physical locations lose their allure when clients prefer and demand that all services, even meetings, be provided to them virtually.
GIG-IZED: More of the work of full-time employees will be performed by outsourced talent. Think shared administrative assistants and paraplanners, for starters. ALL-NET-WORTH: Delivering a broad range of services to thousands of clients with widely disparate assets translates into new compensation arrangements that reflect services actually provided.
DARK HORSE: With technology having upended so many industries — music, retailing, publishing — it is conceivable that a new entrant could radically transform the advice firm of the future. Amazon? Google? Costco, even?

Evan Cooper is a contributing editor to InvestmentNews.