Trending
I am fortunate to work with some great Independent Financial Advisors and my latest message to them goes like this:
"Congratulations you were right and that is both good and bad. When you realized that there was a better business model to be had by going independent you were right and are now reaping the rewards of that model...however, the big boys (Wells, Merrill, Morgan, et al) figured it out and are coming into your space (bad news)."
One of my friends, Ray Stasieczko, wrote this great article recently about innovation: Innovation Has Many Enemies. Ray does a really good job of sharing the sense of urgency that needs to be embraced within the copier/imaging channel if they hope to successfully navigate the 'stormy waters' that technology disruption has brought to that space. Another good friend, Larry Levine, has been beating the drum of digital transformation for years and is one of the greatest voices for #socialselling and #sales period for that industry.
Why am I talking about innovation for independent financial advisors when your business model is reaping tremendous profits right now? AUM is tremendously profitable and that is exactly what has necessitated the massive change for the large institutions toward dropping their commission model and moving into your fee-based operation. This is validating and terrifying if you have any future insight.
Independent Financial Advisors only exist because of technology providing access to the markets for consumers and advisors that wanted to be more customer centric. That disruption that allowed for your business model to come into existence is also a tremendous threat as well. In addition to the competition from the 'big boys,' you are going to have to understand that technology (robo advising) is going to degrade your profits as well. The top and bottom of the market for AUM are going to be incredibly competitive going forward and fees will necessarily be driven down.
Related: 80% of Prospects Choose an Advisor Simply Because of The "Like" Factor
Here is the good news: You were right and you are ready to be right again!
The very courage and agility that allowed you to create/exploit the AUM business model will also allow you, if you start thinking and embracing necessary change, to embrace and profit from the next business model. You aren't going to lose all your customers and you will continue to be highly profitable for the near future.
Don't view this as a challenge... view it as an opportunity that you were made to take advantage of. Not many businesses have the blessing of high profitability while innovating and yours is one of the best ever at it. The big question is how?
Here are some questions to answer that should move you along the way to innovation:
A few key resources to read that my clients and I have found invaluable:
No matter what: You need to recognize what is happening and don't let your current profits lull you into passivity...the big boys are already coming and technology is going to degrade your current model of business...whether you like it or not. Change is either a challenge, or, for those that see it...the greatest opportunity of all.
You can do this on your own...you have the profits and the ability to reap the benefits of change. The big question is, will you? My clients partner with me to help them with the process of innovation while enjoying the profitability of predictable referral based sales systems. I am always open to a conversation...how else can we innovate?