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Winds of Change

My next keynote presentation (I've scheduled myself as the opening speaker at our Insider's Forum conference in September) is going to be the most interesting and the most fun of my career.

I've been writing in bits and pieces about how the financial planning profession has suddenly gone into evolutionary overdrive. The threat and promise of Robo-technology has gotten most of the credit, but the truth is, the profession has been a coiled spring ever since 2008, winding tighter and tighter with a number of increasingly urgent, potentially-disruptive changes coming up over the horizon. You know the list:

-Advisory firms with an aging client base have been feeling growing internal pressures to reach out to the next generation of clients and, at the same time, provide opportunities for successor advisors to market to their peers.

-To sustain their projected growth rates into the future, advisors need to create and implement profitable models where they can access the blue ocean of middle-income clients.

-Smaller firms (most of the profession) are recognizing the need to acquire scale so they can amortize the cost of growing regulatory intrusions and lower internal expenses to stay profitable in an increasingly competitive marketplace.

-As the “fiduciary” distinction is overrun by Wall Street lobbying dollars at the SEC and in Congress, advisors will need to find better marketing language to help prospective clients distinguish between professional advisors and those with a sneaky sales agenda.

-The industry standard revenue model is shifting once again, similar to the tectonic adjustment in the early 1990s-this time from AUM to retainers or hourly fees.

-New service models (the lead article in this issue is an example) are being incubated throughout the profession, offering new and better ways to provide value to planning clients.

-The founding generation of advisors has entered the last stage of their careers. They finally need to take action not only on preserving the continuity of the firm, but also to reconfigure it so that it works as a vehicle for their successors' professional service model. At the same time, they need to evolve their own role in the firm.

Over the next five years, a small number of advisory firms will navigate these challenges, and we'll see what we saw during the last period of dramatic evolutionary change. Those firms that get this evolution right will become the success stories of the next 30 years.

The full story of this evolutionary phase has yet to be told; that is, the pieces have yet to be fitted together into a coherent whole. I've spent a good deal of time thinking about what kind of path advisory firms can and should take through this multidimensional landscape of rapid change-and realizing that it's more complicated and more interesting than I realized. The full picture is still being worked out, but if I'm right, an advisor who falls asleep today and wakes up ten years from now will have trouble recognizing his or her professional landscape.

I'm looking forward to seeing some of you in Chandler, AZ at the end of September, and comparing notes with some of the best thinkers in the profession throughout the Insider's Forum conference on our profession's bright, complicated future. If I'm right, I'll enjoy the satisfaction of having provided a competitive advantage to some of the best people in the profession. Either way, my presentation is going to start a hell of a conversation, and we'll all win in the end.