The What & How have changed for Financial Advisors
By: Derek Notman
Tags: Financial Advisor, Financial Planning, Future Of Work, Virtual, Remote Working

How it used to be

Back in 1985 (and 2006 when I started) financial advisors (registered reps, life insurance agents, IARs, RIAs, etc.) did things differently.

We were taught that our What was Selling a product as a solution. Lots of the time we referred to this as “financial planning” or “financial advice”. It’s not.

But those of us who were in this business for the right reasons did have our “financial planning” caps on when we worked with clients and sold them products. We helped people do what was right for the right reasons.

This model had worked really well for many many decades largely in part because the consumer didn’t have access to information like they do today.

Actual financial advisors (CFPs, RIAs, etc.) were the exception to the rule and certainly a minority. Large financial institutions hired massive armies of sales people to help distribute their financial products. They were mostly paid commissions to sell these products.

For those of us who were honest, ethical, moral, and legal we were able to help a lot of people implement good solutions with the financial products we had access to.

But this model also left the door wide open to suspect sales tactics and major conflicts of interest for those that choose the not-so-high road.

How it is now

Since ~2000 we have seen major evolution as part of the megatrend we are in, but two areas specifically jump out to me.

The evolution of technology: The speed in how technology has evolved has been exponential. It has broken down barriers and empowered the consumer like never before. We now have information at our fingertips and can vet what others are telling us. Technology has been the great equalizer of our time. The evolution of the consumer: Due to the advancements in tech the consumer was able to consume their products and services differently. They have been able to find what they want/need in minutes and have it delivered to their door, inbox, or virtual meeting with literally the touch of a finger.

The Challenge for Financial Advisors

The challenge for our industry is that although technology and the consumer have evolved and stayed with the times, our industry is still stuck in 1985.

Veteran advisors are somewhat resistant to change. They like the office with desks, conference tables, staff, and coffee makers. They invested heavily in these and would rather ride into the sunset then kick the status quo and try something new. And who can blame them, why reinvent yourself within 5–10 years of retirement?

The training and coaching used to train incoming advisors is also a problem. New advisors are still taught to:

Cold call

Practice their “elevator pitch”

Go to networking events

Conduct in-person client meetings at night and on weekends

Be a generalist

Focus on pushing products

And so on

Here is the rub.

Most advisors hate working like this. Why? Because the consumer hates it. An advisor will only subject themselves to so many hang-ups, rejections, and getting porched before asking themselves, “what the f*$k!?”.

Given the world we live in TODAY it would appear there is a perfect storm for disruption & evolution for the financial advice industry.

The What & How have changed

How do we thrive today and in the future given what has happened in the rest of the world?

We must recognize that the What and How have changed.

The What used to be selling financial products under the guise of “advice”. Now I have no issue with the majority of financial products out there, most are great tools, but I have a problem with How they are sold.

The What now is providing awesome financial advice, selling financial products as a byproduct of this great advice. Advisors and financial companies that understand and embrace this, in my opinion, will be the ones to dominate in the world we live in today and the future.

The How used to be the cold calling, hard pitching, brick & mortar tactics of the past. These worked for a long time but don’t work like these used to given the evolution of tech and the consumer.

The How now is relationship based digital marketing. We must go where people are (online) and then be present. We must curate meaningful relationships and empower the consumer to come to us. They are fine with being marketed to but want nothing to do with being Prospected.

There are some great solutions out there for advisors but they are few and far between. Most “coaching” and related services are for the most part stuck in the past, some literally teaching advisors how to do an elevator pitch in an elevator!

There are a variety of Lead Generation & Digital Marketing solutions as well, and some of them are amazing, but as advisors we struggle with these since they are usually offered by a previous advisor who failed out of the business or some “guru” who really has no clue what it means to be a financial advisor.

The Why is the same

Although the What and How have changed, the Why is virtually unchanged, which is a good thing.

At the end of the day the Why is the simple fact that people need the products and services we provide. People will always want and need what we have to offer but the WAY we offer it must evolve.

If the consumer can get their, well everything, online then there is no reason they won’t work with us and get their financial products the same way.

Now some advisors will argue that you can never replace the human element of the work that we do. I completely agree! But doing things through another medium (virtual, digital, etc.) is just that, another medium where we can still connect on a human level. Yes, this is my opinion and I am sticking to it!

But I can back it up to. I have been “virtual” since 2013 and found extreme success in doing so. I have lots of clients I have never met in person. I have new clients reaching out to me knowing they will never meet me in person.

So no matter what my opinion is it would be hard to argue with the fact that the consumer wants/expects/demands a different experience and is actively looking for it. Need more proof? Check out the The Virtual Financial Advisor: Delivering Personalized Advice in the Digital Age 2019 study. These are hard facts.

What’s next for advisors?

I see one of two paths for advisors.

The first being those that evolve and embrace the digital world we live in. That doesn’t mean they need to be all virtual or fee-only. It means they evolve. It means they focus more on planning and digital marketing. It means them becoming what the consumer wants them to be and where they want them to be.

The second path?

Do nothing. Ignore the changes all around us. Slowly go extinct.

What’s the best way for us all to evolve and find the success we are looking for?

Support each other.

We are all on the same team. There is more than enough business for us all. So why not collaborate and support each other’s growth? We all win this way.

I appreciate you spending the time out of your day to read this. I am a friend to all advisors out there, please consider me a resource.

Warm Regards,

Derek