With over 76 million baby boomers retiring, the average advisor pushing 55 years of age, and 20% of them over 60, there is a major shift happening within financial services.
At a time when these advisors’ full focus should be on transitioning their clients into retirement, attracting new clients, growing the value of their business and succession planning, they are faced with the challenge of the convergence of financial services and technology, which is disrupting every aspect of how they operate.
Today, advisors, asset managers, and broker dealers, alike, are struggling to overcome the growing lack of perceived value for the fees they charge. Low cost ETFs and technology are commoditizing asset management, while the investment universe continues to expand, and the complexity involved in managing risk increases. Massive regulatory changes by the Department of Labor (DOL) are causing advisors to question which broker dealer (BD) firms — particularly small BDs — will survive and whether they are even needed going forward.
In a mature and converging financial market, outsourcing is a key factor, and numerous studies report that approximately 70 percent of advisors are looking for a turn-key portfolio solution — and they want these portfolios to be more tactical. Now, accessing ETF strategists through asset management platforms has become table stakes as advisors seek to add value and differentiate by focusing their time and energy on growing their business and enriching the client experience at every opportunity.
Convergence shrinks the value chain and puts the source of returns and the asset managers who produce them closer to the point of sale, in search of additional ways to add value over market returns and advisory fees. There will always be a need for great investment solutions, but what will matter increasingly is how the actual investment experience makes investors feel about their choices.
Maya Angelou once wrote, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Pretty much everyone agrees that financial services will continue to experience profound transformation. This is good news for investors and the financial firms who can adapt and add value in this rapidly maturing and converging market place.
