We're at a tipping point in the history of the advice profession
By DAVID HAINTZ
The ‘tipping point’, a concept popularised by American writer Malcolm Gladwell, is commonly defined as a moment in history when a compelling idea crosses a threshold and becomes unstoppable. We’re at such a point right now in our industry.
First, let me wind back a second. In my own writing and presentations since establishing my consultancy, I have spoken to audiences globally about the idea of The Life First Adviser – a paradigm shift in what it means to be a valued financial adviser.
This shift refers to a change in the conversation with clients - from money to meaning and from product to people. It is one that leads to a redefinition of the role of an adviser from purely a manager of people’s financial affairs to a life coach.
I have shown over some years now that this change in your value proposition can tap into an unmet and growing demand in the community, one that can lead to significant growth and profitability for you and which can deliver great results for your clients.
Of course, none of this is a secret. In fact, it’s now nearly half a decade since I and my co-author Barry LaValley wrote a book on the subject called “The Life-First Advisor: How the New Financial Coach Connects ‘Money’ with ‘Meaning’”.
The world catches up
But now the rest of the world appears to be catching up. And fast. In fact, there are remarkable echoes of many of our arguments in a new major report on the future of the global wealth management industry by Boston Consulting Group (BCG).
“When Clients Take the Lead” is the theme of the report, which, in a nutshell, concludes that by shifting their focus from “wallets to needs” and adopting a client’s eye-view, advisers have an opportunity to tap into an unprecedented wave of prosperity.
"For a long time, the typical industry model has operated in an inside-out fashion,” the Boston Consulting team write, “It’s time to correct that. Instead of following a corporate agenda, wealth managers must pursue a client agenda.
"Instead of sorting clients by their wallets, they must differentiate them by their needs and use behavioural insights to unlock new sources of value. And instead of letting complexity and cost dictate the pace of innovation, they must let clients set the tempo, employing digital platforms and cross-functional teams to speed go-to-market and to scale impact."
Does that sound familiar? It’s what we have been talking at Global Adviser Alpha for years! There’s a feeling in the community that advice, as it has traditionally positioned itself, does not deliver real value. And that is because we have framed the value proposition the wrong way around.
Of course, portfolio returns are important, as are tax management and risk and cash-flow modelling. But these are inputs, not outputs. What we are selling, what we are providing in the clients’ eyes is security, peace of mind and a sense they that will be OK.
Light years ahead
The good news for advice firms that I talk to regularly is that you are light years ahead of the banks and big institutions, who according to the BCG report “continue to view the world as they always have, seeing clients primarily through the prism of products and serving them as a collection of wallets”.
The opportunity in this shift is enormous. While the pandemic was widely expected to put a massive dent in global wealth, the reverse has been the case to date. In fact, the Boston Consulting report estimates global financial wealth alone rose more than 8.3% over the course of 2020, reaching an all-time high of $US250 trillion.
"The next five years have the potential to usher in a wave of prosperity for individuals and wealth managers alike,” the BCG report says. “But sizing and capturing that opportunity requires adopting a client’s eye-view and reorienting the entire business model accordingly.”
Can we spell it out any more plainly?
Your potential client base is crying out for a new approach. This is one that pitches its proposition in terms of clients’ life purpose, that switches from a left-brain, analytical, numbers-based approach to a right-brain, more intuitive and holistic framework that puts “life first”.
“By turning the lens around, wealth managers can access revenue pools that they’ve been missing out on for years,” Boston’s team say. “(But) to succeed, they must shake up their current ways of working and digitise their business models, enabling cross-functional teaming and realigning roles, performance measurement, and incentives.”
“Those that adapt their operating model to put clients at the centre and fully adjust their processes and ways of working can turn the next five years into a period of unprecedented prosperity."
You heard it here first. The tipping point has arrived. You just need to plan to act on it.
DAVID HAINTZ is a CFP and the founder of Global Adviser Alpha – a B2B consultancy helping leading global advice businesses to become world class and achieve outstanding results for all stakeholders. This article was first published on Global Adviser Alpha's blog and is republished here with permission.
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