March 24, 2020
Even before the race to zero commissions this past Fall, the industry has been striving to demonstrate and reinforce the value-added relationship of an advisor to investors. The keystone of this relationship is, as it has always been, the extraordinary value of sound advice and coaching, particularly during times of market turbulence. But this advice and coaching is now being uprooted from its knee- to-knee intimacy to a digital conversation at a time fraught with great personal and financial anxiety.
Although investors of all ages and asset levels have sought the inclusion of a digitally enriched experience as part of their relationship, this evolution has been accelerated overnight to become the default platform for value delivery for all investors in the midst of a historically volatile market. It is destined to remain a significant means of both customer interaction and value delivery when we move back to a “new normal”.
Wealth management firms now have to ante up to a new set of table stakes much sooner than they had planned. The speed of the transition will be disruptive, but there is no turning back. There will be an arms race to provide a digitally enriched value proposition for both advisors and investors both of whom may have been dissatisfied with the support they have received through this tumultuous period.
Key elements that we need to consider include:
- A household-level platform. A consistency in look and feel, navigation, information availability and service request fulfillment regardless of account type, service level or compensation model.
- The opportunity presented to adopt existing technologies to simplify customer on-boarding, rollovers, etc.
- Delivery of broader financial education resources as part of the trusted coach role. Including Integrated support (teleconferencing,
- Much greater integration of interactive or gamified components in areas including financial goal planning, risk, generational wealth transfer, and tax optimization.
- Full visibility and identical data readily available for advisor-investor discussions
This is an ambitious undertaking for any firm in any environment. An additional challenge will be accomplishing this transformation given the near-term revenue reduction brought about by the abrupt declines in the market value of client assets and the prevailing contraction in commissions. The new normal will require innovative partnering with solution providers many of whom are already evaluating this same environment and concluding that a win-win will require a true strategic relationship with their customers.
These relationships will also be part of the new normal.