Practice Management

As the industry evolves, how will you use your time?

Financial advisers may function more as coaches or marriage counselors as robos increasingly handle investment management for clients at all asset levels

Jun 17, 2016 @ 3:06 pm

By Joni Youngwirth

Evolution is the hallmark of an enduring industry. Arguably one of the most dramatic changes to impact our industry is the robo-adviser. Yet, given the rate at which technology develops, we've likely only seen a glimpse of what robo-advice will become in the future. It's not illogical to assume robos will eventually handle investment management for clients at all asset levels. Similarly, the proliferation of exchange-traded funds will serve to “dummy proof” the investment management process. I wouldn't be surprised to see the day when clients don't want to pay (or pay much) for traditional investment management.

What will the role of the financial adviser be then? How will you use your time?

Let's think through a situation advisers deal with daily. A pre-retiree with a million-dollar portfolio comes to you asking when she can quit her job and retire. You run some numbers and come up with a plan for how she can support her retirement lifestyle.

But imagine another scenario, in which your task may be quite different: Our expectations of what it means to retire are also evolving, requiring you to be able to answer new questions from clients.


People are healthier and living longer, and according to a 2014 Merrill Lynch Retirement Study, approximately 70% of retirees want to continue working in some capacity in retirement. New language like “Retirement 1,” “Retirement 2” and Retirement 3” reflects a landscape where retirees ease into this stage of life.

The next level of retirement may involve part-time work, a total career change or a new business venture. Advisers must be prepared to answer questions like, “How much can I invest in my new business?” You'll also need to identify issues such as whether there is a solid business plan, how long the client plans to stick with the new endeavor, or if the client has health issues that might interfere.


Some clients provide financial support to aging parents, grown children and grandchildren — simultaneously. Sometimes there is no choice but to do so; other times, a client may provide support well beyond the typical time frame for a dependent child. Conversations may need to shift from clients' perception of their responsibility for others to their need to protect their own interests. Guiding clients to alternative approaches is more about coaching than providing traditional financial advice.


Many retirees say they plan to travel when they retire. Yet, as reported in “7 Misconceptions About Retired Life” (U.S. News & World Report, October 2011), few actually do so. Often, retirees find themselves limited by health concerns or even financial anxiety. The conversation about travel may, therefore, have more to do with clients' health, passions, aspirations and values, such as adventure or nature appreciation, than with finances. And when spouses have different desires, add marriage counseling to the adviser's required skill set. You could find yourself urging clients to “do it now” rather than wait for retirement.

When you think of the decisions clients typically make about retirement, while they have a financial component, there's often an even larger nonfinancial component that requires clients to diligently assess what's most important in the last third of life.


In a future where robo-advisers may dominate investment management, imagine about 80% of your conversations with 80% of your clients being like those outlined above, with the remainder of your time devoted to traditional responsibilities like asset allocation, portfolio reviews or product selection.

Some advisers will say, “That's what I do now.” Others will pause to consider whether this is the future they want to be part of. Tenured advisers with limited years left in the industry can probably ride things out with no changes to their business model. New advisers may find that their perceptions need to shift — that they need to develop new skill sets beyond those of the CFP practitioner, or, if that's not appealing, find a more analytical position, perhaps in a larger enterprise firm. For those midcareer, don't be surprised to realize that “what got you here won't get you there.”

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.


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