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Written by: Earl McAlear, Head of US Product Strategy and Molly McClure, Head of Marketing, US | intelliflo
The recent inaugural Future Proof Retreat brought together over 500 financial advisors, wealth management professionals and industry leaders to brainstorm and collaborate in Colorado Springs, CO. After listening to compelling keynotes, engaging in dozens of intimate conversations with financial advice professionals and hearing recurring observations, it becomes clear that there are several trending challenges and opportunities facing the industry. These include the humanization of financial advice, the industry’s integration problem and the rising need for better cash and tax management strategies.
Enhancing the human element of financial advice
Financial advisory services have historically been viewed as very numbers-centric, with advisors tending to rely heavily on spreadsheets and figures. This approach is shifting to serve modern clients better – advisors are being challenged to embrace the more human, relationship-driven side of financial advice. Knowing and understanding who clients are, their goals and fears over time will allow advisors to make more of an impact and deliver greater value to clients. The closer advisors can follow their clients’ personal journeys, the better they will be able to serve them. This shift, if done right, will lead to stronger retention and loyalty. This is a topic that was thoroughly explored in Brian Portnoy’s keynote.
Of course, this is easier said than done. Advisors are already stretched thin, and a more human approach to advice requires additional time. The answer will be found in leveraging automation and digital tools to streamline manual, cumbersome tasks and lower value interactions to save advisor time and effort for the larger, strategic conversations.
The ongoing integration problem
The technical ecosystem for financial advice continues to grow more fragmented, fraught with point solutions that don’t communicate well with one another. Such silos are detrimental to innovation and the client experience. Plus, disparate systems create inefficiencies, reducing advisor productivity and the number of clients they can effectively serve.
Moving forward, more will gravitate toward open, cloud-based platforms to break the constraints of a myriad of pieces together with bespoke features. Platforms that leverage open APIs to enable seamless integrations with partners of choice will be prioritized. The strategic use of such modern technology to help digitize and automate processes can enhance internal efficiencies, reduce costs and free up significant advisor time.
Need for better cash and tax management strategies
As advisors look to remain competitive and grow, offering value-added services focused on tax planning has become increasingly critical, especially as economic turbulence and widespread financial anxiety continue. Tax efficiency is an area that advisors can and should be planning for on a year-round basis. Harvesting tax losses or gains, setting capital gains limits, optimizing asset locations, considering householding models and leveraging what-if scenarios are strategies that can be leveraged to reduce tax burdens. To effectively do so, advisors must ensure they are leveraging a sophisticated, comprehensive, tax-aware rebalancing solution.
As cash continues to be on the rise, another advisor trend is the need for more flexibility in managing cash. Advisors should be able to raise, invest and handle margins in portfolios, while managing cash at the account and household level to address specific account needs or modeling.
These trends all point to the evolving advisor landscape – client expectations are rising, the need for greater efficiency is critical and advisors are being challenged to think differently and deeper about client relationships. The firms that keep a pulse on these trends and embrace emerging, modern technology and strategies to automate tasks and free up more advisor time for strategic initiatives will be well positioned for success.
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