Future advice business will still require human touch for clients

Technology and regulation will likely be the key forces shaping the advisory business over the next 10 to 15 years. But to paraphrase physics Nobel laureate Nils Bohr, making predictions about the advisory business is very difficult, especially if they are about the future.

Given that challenge at the recent Icons & Innovators’ Innovation Summit in New York, financial advice trailblazers discussed their views of the future.

David Booth, chief executive and co-founder of Dimensional Fund Advisors; Joe Duran, founder and CEO of United Capital Financial Partners; Ken Fisher, founder, executive chairman and co-chief investment officer of Fisher Investments; and Mark Tibergien, CEO of Pershing Advisor Solutions, offered their thoughts on the future as seen through the prism of their own experiences.

“Over the next years, growth and profit will be driven by the client experience,” Mr. Duran said. “Our industry still uses pen and paper; people are using their phones. That’s why I believe that if you are not video-based and not operating 24/7, you won’t exist.”

Noting the impact technology has already made, he expressed confidence that even greater changes are coming in the way advisers, clients and information interact.

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Despite a future in which he envisions technology thoroughly permeating every aspect of the advisory business, Mr. Duran believes that a 100% digital solution is not a winning strategy. In fact, he has no fear that advisers themselves will be automated out of existence.

“People want to blame someone if something goes wrong, so they need a human,” he said. “But that human has to be connected to them digitally.”

Mr. Tibergien sees one question at the heart of that digitally enhanced adviser-client experience: What will it revolve around?

Adviser as sherpa

“I see the adviser-client relationship evolving into one where the adviser is a Sherpa, providing guidance around choices,” Mr. Tibergien said. “It will be less about investments and financial planning, more about helping people where they are in their particular stage of the life cycle.”

Mr. Duran and audience members agreed with that perspective.

“Hopefully, we will come to be seen as the people who can help you live richly today, not die rich, which is where I believe too much of the focus has been,” he said.

Noting that technology continues to drive down administrative costs throughout the investment industry, Mr. Booth said he is confident this will further democratize the delivery of financial advice.

“I’m optimistic about advisers’ ability to serve smaller and smaller clients in the future, as those costs come down,” he said.

Ken Fisher, whose firm has $72 billion in assets under management and is the nation’s second-largest registered investment adviser after Financial Engines, sees the future differently.

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“I disagree with pretty much everything that’s been said,” he told the audience, which was made up of 2017 and 2016 winners of InvestmentNews’ Icons & Innovators’ awards.

“I think ’40 Act advisers will be gone in 10 years,” Mr. Fisher said, using the term he prefers to RIAs. “The brokerage world, which now means banks, will push us out and subsume us. They lobby in Washington, we don’t, and there is no place left for the broker-dealer world to go but to legislate us out of existence through the concept of ‘harmonization,’ which is a buzzword Washington loves.”

Although the Department of Labor fiduciary rule raised public awareness about the issue to some degree, Mr. Fisher said most people don’t know there is a difference between a “suitability standard” and a “fiduciary standard” and that harmonization would seemingly end the discussion of the issue.

Mr. Fisher quipped that if brokerage firms don’t drive advisory firms out of business, he will.

Evan Cooper is a freelance writer.