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The nirvana for most professionals is to work only with affluent, and acquiescent, clients. The challenge in doing so is that the affluent will inevitably become more difficult to get in front of personally. They will become less acquiescent.
As with the famous line from Jurassic Park – “life will find a way” – so too does technology find a way to get between the service provider and the consumer of those services. Nowhere in the market will this be more apparent that with the affluent consumers.
Whether we see technology and associated software solutions as distractions, or interruptions, or alternative choices, is a moot point. The problem is that the affluent are almost invariably are the greatest adopters of new technology and software solutions which deliver convenience at reasonable price points. The affluent are far more likely to have accounting software packages for instance, which they use to monitor and manage their own finances, and which in turn minimise the need for a significant amount of accounting or financial planning advice that the consumers would have “purchased” from a professional a decade ago. The affluent are far more likely to use technology platforms which personally access for banking, lending, managed or mutual fund investments, and so on.
Technology finds a way to introduce convenience and control into the lives of the intelligent consumers. The affluent have a tendency to be intelligent and well educated of course, and typically have become affluent either because their education provided them with a high paying career path, or they have built and retained wealth through entrepreneurial endeavours. Either way, using technology for such people is not unfamiliar territory. In fact, such people are far more likely to have homes with systems installed which allow them to open and shut doors or curtains with an app controlled from their smartphone, or manage their home entertainment system remotely…and so on.
What this means for professionals is that the ideal clients we often describe – the affluent – are in fact the most susceptible to robo-advice or other technology-based solutions. They are the segment of society which would appear to be most likely to sidestep product intermediaries in the future. A simple personal example should illustrate the point:
15 years ago I would typically pay something like $4,000 per year to my accountant to complete some bamboozling sales tax returns for my business, together with figuring out the final end of year tax return. In part I was paying for convenience, but in truth I was paying a lot of that fee because of the complexity of the goods & services tax returns at the time and the sheer amount of time that was involved. The process of compiling and then delivering the information to the accountant, who then started sorting it and figuring everything out took weeks (if not months sometimes) and multiple meetings and phone calls.
Now I use a software package which costs me something like $300 per year, and which is accessible from my smartphone, or tablet, or desktop, and which can be used by myself or any staff in real time. Oh, and doing a GST (sales tax) return now takes less than 10 minutes. No accountant is involved in that process any longer. Technology rules, huh?
For any professional who aspires to work predominantly with the affluent there are 3 strategic positions which must be adopted in the development of the practice, if the practice is to survive commercially.
1. The service offered to the market by the practice or individual professional must be something separate from packaged product.
In simple terms this means a practice needs to be offering something other than managed funds, or facilitating insurance policies, or tax compliance. As with the example above, we must be mindful of the services which can be reduced to algorithms and data management – and technology solutions will move into those areas as well.
2. WE must be users of the very technology which challenges our business models.
It is not so much a matter of “keep your friends close but your enemies closer”, but a matter of us embracing the same manner of doing business as our target market. We have to be in accord with their environment, not in conflict with it.
3. Accept that “data is the new gold”.
It is not a currency per se, but it is a store of value for the firm. It can be turned into currency for our practice in any number of ways. Data is the key link between all the technology and software solutions which we choose to use with and for clients, and the technology solutions they choose to use themselves, as well as our relationship and services with those same clientsand products which they may use. Customer data links all of it, and all of it wants more of the customer data.
For a professional practice positioned for the future to work with the affluent these 3 strategic positions will be critical I believe. The separation of advice or professional services from product, together with being a leading edge technology adopter, and a relentless focus on digging for data and then capturing and storing it (even if you don’t know what you’re going to do with it yet) are the keys to positioning the business to work with the affluent.