Great firms view innovation as an asset, adapting and delighting clients with enhanced services that positively affect client engagement, particularly during uniquely disruptive times like the present. As we approach 2025, let’s imagine how our relationship with clients might need to evolve to continue winning into the second half of the decade.
With artificial intelligence (AI) reshaping the landscape over the next five years, the pace of change and innovation will be more abrupt and require all firms to assess what they deliver and how they interact with clients.
Years ago, almost everyone providing wealth services led with investments and would perhaps offer retirement planning as an ancillary service. For most firms today, financial planning has broadened to include estate, tax, education, and philanthropic planning, and more. Investments are simply in the service of that financial plan. As a result, clients feel more understood and more satisfied, and have become better long-term investors. The internet and cloud computing made it possible to democratize information and wealth management. Now the question every firm should be considering is how to work with the next great wave of AI and where the industry will be at the end of this decade.
Quantitative skills have long been the currency of our industry, measuring portfolio performance and providing probability analyses for financial plans. Professionals in our industry still spend the vast majority of their time on math. Yet technology is rapidly absorbing more of the work. AI will unquestionably be completing much of the analysis humans are doing, but more efficiently and with pro-active insights. This will force many firms to climb up the value chain. Leveraging behavioral tools to gain deeper insights into your clients’ priorities – beyond just their financial objectives – will be essential. As we focus on human traits such as empathy, understanding, and nuance, these will become increasingly crucial in our work. Ultimately, our goal is to ensure that money serves the clients’ lives, rather than the other way around.
Understanding clients’ priorities and what makes their lives meaningful is indispensable to building the right goals and plan. Helping clients use their money to maximize their time and use their energy efficiently will ultimately be as important as ensuring they have an adequate financial plan. Advisors will need to keep evolving the qualitative, emotional side of the financial conversation with clients – ideally in a memorable, repeatable, scalable way across the enterprise.
Many wealth firms today are broadening their offerings well beyond investments and planning, including services like in-house accounting, lawyers, estate planning and even family-office-style concierge services. These might be very important to some clients; however, most of these services are loss leaders and can compromise client relationships if not perfectly executed. And there’s an opportunity cost to your firm’s time and focus. Building a comprehensive platform should be a priority, but partnering with external partners (whom you can replace if they don’t work well) is far more efficient than delivering all of the underlying services yourself. It’s next to impossible to be great at everything, especially when there’s so much innovation in every aspect of every business. Your clients want life with you to be easier and less stressful. Concentrate on being the facilitator of their financial lives and ensuring you are giving them a bespoke and elegant solution that doesn’t compromise your relationships. Practice at the top of your license.
By the end of the decade, the fastest-growing wealth accumulation will be happening with Gen X as their kids become self-sufficient, they focus on their own retirements, and they inherit their parents’ wealth. This bridge generation is more actively involved in every decision in their lives, from booking travel to managing their 401(k)s. Our service models have to adapt to a more collaborative and flexible approach – one that provides complete transparency, and more importantly, shared decision-making frameworks and systems. Unlike Baby Boomers, the next generations want to be in the cockpit, not in the back of the plane. Our tools must be intuitive and straightforward, enabling them to understand and engage with their financial lives.
With every wave of innovation there are always the early disruptors, the followers, and the late adopters. My suspicion is that by the end of this decade, the fastest-growing firms in the industry will be helping people maximize their lives, simplifying their financial complexities and serving as financial guides – armed with curated, collaborative solutions that go far beyond investing and planning. Leading firms recognize that money is driven as much by emotions as by intellect. They understand that what brings meaning and fulfillment to their clients’ lives is just as important as achieving their financial goals or “magic number.”
Joe Duran is managing partner at Rise Growth Partners, the ultimate growth partner for exceptional advisory firms.
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