Post COVID-19 Shifts in Financial Advice: The Delivery of Financial Advice in 2023
by Derek Notman, Virtual CFP and Founder of Conneqtor
The delivery of financial advice will never be the same. The pandemic of 2020 made sure of this. We should be grateful.
Since the dawn of time, financial advice has been delivered by advisors and the like via the brick & mortar and belly-to-belly model. This included things like driving to clients’ homes, meeting at the advisor’s office, sharing paper presentations, using whiteboards, going to networking events, cold calling, and of course the dreaded door knocking.
One may say “prospecting” is not the delivery of financial advice but in reality, it is. It’s where the financial planning process ultimately starts since, without marketing, we don’t have potential clients to deliver our advice to.
This delivery advice model worked really well for a long time, but the writing was on the wall before COVID-19 sped up the changes that were already well underway. Since the early 2000s, there has been a shift in consumer/human behavior. This shift was perpetuated and made possible at an exponential rate by technology. It was also a known fact pre-pandemic and written about extensively in the 2019 McKinsey study: The Virtual Financial Advisor.
Why should advisors pay attention to all this? Well, advisors like facts. We deal with them all the time while helping out clients. We work with the facts today while planning for whatever the future brings.
Advisors must do the same for how they deliver their advice.
The Technological Evolution
People used to go to a bar to get a date. People used to go to a bookstore to buy a book. People used to use a travel agent to book a trip. The list goes on.
We lived our lives and consumed our products and services this way for the simple fact that this was the way things were done.
But just like death and taxes, change is also a certainty.
The technological evolution we have seen over the last two decades is proof positive that change does indeed happen at an exponential rate. Human beings as a species tend to prefer things they can count on like the sun rising in the east and waking up every morning. So when change is thrust upon us we tend to initially reject or at least push back on it. It’s only normal and natural.
When the change is constant and pushes us every day, we eventually succumb to it and ultimately human behavior changes.
Fast forward 20 years and everything we did “in-person” has now shifted online. Think about it, where do you go when you need to buy or research something? I’d be willing to bet it’s your smartphone, tablet, or computer.
The fintech (or advisor tech) space specifically has seen tremendous growth in developing some amazing tech to empower advisors to do their job that much better. But there is an outdated mentality when it comes to using these tools.
Financial Advice Delivery 1.0 is a Dinosaur Called Outdatedasaurus.
Up until the pandemic, and even during it, financial advisors were still primarily delivering financial advice via the old, traditional methods previously mentioned. I believe this to be a symptom of two things: that things have always been done this way AND that the majority of financial services companies out there are still teaching the old methods.
Now, this is not a blanket statement. Many advisors had started to embrace technology some time ago, but they are the exception to the rule.
For the most part, financial advice is still delivered via in-person meetings with paper fact-finders, paper illustrations, paper applications, and paper service forms (can we say outdated?!).
The good thing is that things are changing since the consumer has demanded it and grown accustomed to it in all other aspects of their lives.
But with change comes growing pains. These growing pains are part of why advice delivery has been so slow to evolve. Yet with pain comes growth and improvements. The hard journey of change is worth the end result.
Financial Advice Delivery 2.0 in 2023 and Beyond
Although my crystal ball has never worked, here is what I think the delivery of advice will look like in 2023 and further down the line.
First, I must state that (in my humble opinion) the one element that will never change in the delivery of advice is the human element. Human beings are dynamic, emotional, and social beings. Algorithms aren’t. Part of the immense value that advisors bring is their human understanding coupled with their advice expertise. I do not think an algorithm will ever replace us (if it does, then Skynet has won).
In 2023, I see the delivery of financial advice as follows:
More trust: Our industry has a trust problem, which I believe will be improved through a shift from product to planning coupled with more transparency of services, prices, and WHO advisors are.
More transparency: More and more advisors will embrace the power of sharing who they are, what they do, how they do it, and who they do it for. All of these things are needed to instill trust in the client acquisition process.
Planning first: Financial products will always have their place but will more than ever be a byproduct of awesome financial planning.
Technology amplification/simplification: Advisors will be almost entirely virtual/digital in everything from data gathering and writing business, to service and self-service.
The digital medium: Advisors will have embraced, en masse, all things digital marketing.
These changes are upgrades that advisors and the firms they represent must install to be successful in the near future.
Financial advice is and must always remain personal, customized, and human. But the way (medium) this advice is delivered has to change with the times. Companies like Asset-Map, Riskalyze, Altruist, Advisor Websites, Redtail, eMoney, Zoom, FreeConferenceCall, Grasshopper, and so many more have made it possible for advisors to thrive in the digital world we live in.
In 2023, we will have seen most advisors make a major shift away from big and expensive offices to digital delivery. Digital delivery means advisors have simply reallocated money they were spending for physical assets into that of digital ones. They will still “own their space”, but their space now looks different and can be accessed regardless of physical location.
By adopting this new way of doing business, we can help more people with their money at scale.
Technology is not going away. Either we embrace, learn, and adopt it or we don’t. Those that don’t will slowly go out of business.
Sure, you can argue this all day long but the fact remains that human behavior changed forever in 2020. People love working remotely. People love access to information and solutions at their fingertips from their couch or lounge chair on the beach. People love transparency. People, like your potential clients, love how technology has improved their lives.
So, I pose a question to you. Do you love technology and where do you see yourself and practice in 2023?
If it does not include digital delivery, just know that other advisors are already doing it and it will be harder and harder for you to bring in new clients. You will lose market share. You will slowly go out of business.
Disagree? Let me know, I always love a good chin wag!
Best Regards,
Derek Notman
Virtual CFP and Founder of Conneqtor