Changing the financial advice industry narrative: put the client first

It is incumbent upon us all to meet the quickly evolving needs and expectations of our customers

Jul 5, 2017 @ 6:35 pm

By Steve Dunlap

While the DOL fiduciary rule remains stuck in a political quagmire in Washington and the industry argues the risk of higher compliance costs versus the harm brought by conflicts of interest, our industry needs to look at what it actually means to put the client first.

We should look beyond the pros and cons of regulation and address a more compelling and productive focus for our industry and the people we serve: how to best serve the investor, period. While the original scope of the rule was heavy-handed, the core idea behind the rule is a no-brainer. Is anyone arguing against acting in the client's best interest? That's not enough. We need to change our frame of reference, the way we speak, even the way we think — with the customer placed squarely at the center of these discussions.

(More: What financial advisers can learn from Amazon)

We should be looking at ways to change the current narrative about financial advisers, and frankly, what threatens the advancement of financial services. It is incumbent upon us all to meet the quickly evolving needs and expectations of our customers. In an increasingly tech-driven world, as an industry, we're just not.

According to a recent J.D. Power study, millennials with $100,000 in investable assets currently control the largest portion of at-risk assets managed by traditional financial advisers. Half of those investors (48%) say they "probably will" or "definitely will" leave their current firm and adviser, compared with just 8% among all other generations of investors.

In a separate survey by professional services firm Accenture, 64% of millennials say they prefer hybrid investment advice over a dedicated human adviser or conventional robo-advisory services, compared with just 28% of baby boomers.

While the digital world raised the bar for most consumers in terms of getting anything they want instantaneously and just the way they want it, the retail financial services industry has not kept up. Part of the problem is that this industry continues to treat the financial adviser as the client, instead of the investor.

As a result, platforms, technology, reports and even statements are designed around the adviser's needs, with the end-consumer too-often left as an afterthought.

Advisers are in a great position to deliver what customers want and need, they just need the tools to do it. We need to step up the features that enable the stellar customer experience the customer expects.

Too much technology across the industry is a cobbled-together collection of old platforms and dated interfaces. Firms need to focus on development of a delightful user experience, like nearly all other industries already do.

(More: How technology will alter the role of human advisers in wealth management)

The industry is evolving from a historical position where advisers were largely product salespeople and is moving toward empowering them as true professionals rendering advice. In the past, technology only supported sales efforts. Today, it's critical to delivering an experience by which the investor considers, creates and consumes financial advice. It must be delivered in a way that makes the adviser more relevant, not less.

Done right, this means we find ways to encapsulate and automate advice, fine tune it and personalize it so that it bears the unique personality of the financial adviser.

We need to design systems that simulate the traditional offline process done in an adviser's office: interview, data collection, analysis, relationship building, delivery of recommendations, answering questions, responding to objections, execution of recommendations, ongoing management, review of performance results, etc. We need to consider this entire investment process and re-imagine it in a digital construct so we can determine how to facilitate investor/adviser interaction and development of trust and rapport. Within that, we must look at ways to deploy modern tools for collaboration, information exchange, video conference, chat, co-browsing, co-creation, etc.

Ideally, we will develop an entirely new metaphor for how consumers consume advice. This should evolve from "answer questions, get a recommendation" to something much more collaborative that lets the consumer determine how much they want their hands on the wheel, versus how much they delegate.

(More: Most advisers could be doing a lot more with tech)

This new digital experience is coming. Soon, it will not be just an idea or concept, but reality. It will build collaboration right into the platform. It will take the traditional investment process and deeply integrate the human touch in a digital way.

Steve Dunlap is president and chief operating officer at FolioDynamix.


What do you think?

View comments

Recommended for you

Upcoming Event

Nov 19


New York Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


These are the federal and state rules that will most impact 401(k) advisers

Will Hansen, chief governmental affairs officer for the National Association of Plan Advisors, discusses regulation and legislation poised to have the biggest impact on advisers.

Latest news & opinion

Social Security funding outlook improves slightly

Retirement reserves extended one year; disability fund by 20 years

IBD report: Another impressive year

Despite a stock market decline, revenue is up. And the streak isn't expected to end anytime soon.

IBDs with the most CFPs

How many of the more than 83,000 certified financial planners are employed by the big independent broker-dealers?

Richard Thaler wants to use 401(k)s to boost Social Security payments

The Nobel laureate wants to simplify drawing down retirement assets, which he thinks is 'way harder' than saving the money.

InvestmentNews announces 2019 Innovation Awards winners

Sheryl Garrett is this year's InvestmentNews Icon.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print