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The Great Unused Resource

Some years back, as a standard part of my industry presentations, I would ask the audience how many of them would, if they could, go back to where they were 10 or 15 years ago, career-wise or, for that matter, life-wise.  

Very rarely would a hand go up.  And then I would draw the obvious conclusion: 10-15 years of change have been beneficial to you in your career and in your life—all of you, without exception.  And yet we instinctively fear and avoid change in our lives, preferring where we are now to where we could be if we embraced the potential for doing things differently.

Knowing what you know now, seeing what you see around the room, don’t you think it’s time that we all consciously embraced change, instead of trying to maintain our comfortable status quo?

I’m bringing this up again because I’m seeing an uncomfortable dynamic in the advisor community.  People my age, who I grew up with in the business, the one-time rebels in the financial services community who bravely, boldly created the planning profession out of a dysfunctional sales culture, have gradually become obstacles to change in their own firms.  Their successors and younger advisors are becoming impatient with the stagnation of a business where the founder would prefer not to make any significant upgrades or shift service models and pricing structures until he or she is safely retired—ten years or more down the road.

This is not, I’m sure you know, a recipe for professional success, and I think the dynamic is retarding the profession’s progress at a time when clients are increasingly demanding new services and different ways to pay for them.  The profession is offering a lot of new software products, and business models are becoming increasingly sophisticated, what with the increasing popularity of the EOS management structure, and dedicated professional managers of advisory business operations.  Not enough firms are taking full advantage.

I think most readers know the ingredients of these evolutionary demands that are pulling a reluctant profession into a better future.  We have new planning software that does a much better job of delivering advice to younger clients (Elements) and to pre-retirees and retirees (Income Laboratory), new software that makes it much easier to build office workflows (Hubly), and automated client communication tools that ensure that nothing falls through the cracks (Pulse360 and Knudge).  There are 3-dimensional portfolio risk tools (Andes Wealth, StratiFi and Tolerisk Pro), and increasingly sophisticated tax planning and estate planning programs (Holistiplan and FP Alpha).

Younger clients (the clients of the future) are asking for revenue models that are different from the AUM that most advisory firms currently charge.  Advisors who decide to move toward serving a specialized clientele, where they know and understand the challenges before the client walks in the door, are delivering much more comprehensive and detailed advice than the traditional general practitioner advisor who is still providing retirement planning and portfolio management.

The people who see these change imperatives most clearly are the younger members of an advisory firm, many of whom would not choose an advisor for themselves who provides services the way their current firm does.  I would call their insights ‘The Great Unused Resource’ in the profession today—the internal voices that are going largely unheard or ignored, not because their ideas are unworkable, but because they are proposing changes to older firm owners whose first instinct is to resist the inexorable (but sometime uncomfortable) forces of evolutionary progress.

How do we change this dynamic?  I would guess that most of us in the older, foundational cohort of the profession can remember when we were at the forefront of yanking the service model (and market share) away from the old wirehouse way of doing business.  We led what was fundamentally a consumerist revolution, pulling clients from the far side of the table to a seat next to us, throwing away even the most lucrative conflicts of interest and pioneering better ways of serving clients and running a client-first business.  The rich software ecosystem in the advisor space is testament to the pioneers’ willingness to experiment with new ways of doing business and serving clients.

If we remember that energy, then we might be able to recognize it in the successor advisors who work at advisory firms.  That energy can be harnessed, along with all the evolutionary energy swirling around the profession, to produce a leap forward in services, efficiency and still-lower-conflict client relationships.  

It will require the founding advisors to listen, to step back from the decision-making processes, and to grit their teeth and allow their business lives to be upended the way they once were upending everybody else in the financial services world.  The adage that you have to constantly reinvent yourself is best followed by the younger advisors who seek change rather than avoid it, and it’s time for my generation to go along for what could become a very interesting ride.