Future Financial Planning Megatrend No. 3: Rethinking Product and Market Approaches
To help secure your place as a successful financial advisor of the future, you must prepare today for the challenges and changes that lie ahead in the financial planning and services industry. Keep in mind that those who play offense in this fast-paced, rapidly changing industry are usually on the lead whereas those who play defense are often left with no choice but to play a never ending game of catch-up. What side of the field do you want to be on?
To be on the offensive side of innovation and change you must look to predictive advice and future trends that will likely have a significant impact on the financial planning industry. One of many trend forecasting reports that may be helpful to forward-thinking financial advisors is Roubini ThoughtLab’s September 2016 report entitled “Wealth and Asset Management 2021: Preparing for Transformative Change.”
The report sets forth five key megatrends that are predicted to reshape the financial planning industry and global wealth profession over the next five years. On the Summit Brokerage Blog, make sure to check out our previously published blog posts on this report:
- Click here to read our blog introducing the report;
- Click here to read our blog discussing the report’s first megatrend, “The Big Shift”, in greater detail; and
- Click here to read our blog discussing the report’s second megatrend, “The Rapidly Evolving Investor”, in greater detail.
This instant blog will provide a more detailed discussion of the third megatrend, “Rethinking Product and Market Approaches”, and the remaining two megatrends will be discussed in future Summit Brokerage blogs.
Rethinking Product and Market Approaches
The following are key takeaways from the “Rethinking Product and Market Approaches” portion of Roubini ThoughtLab’s “Wealth and Asset Management 2021: Preparing for Transformative Change” report:
Top product priorities for the future:
- In light of both rapidly evolving investor needs and technological advances, wealth and asset management firms have shifted their top product priorities for the next five years. According to the Roubini report, at the top of this priority list (for 59% of surveyed investment priorities) is building, partnering, or acquiring fintech (financial technology) capabilities. Other top priorities for surveyed investment providers include creating more innovative and customized products and services (58%) and focusing on providing superior returns and advice (58%).
Adapting marketing approaches:
- In order to retain and require a more diverse set of clients, surveyed investment providers are recasting their marketing approaches. According to the Roubini report, at the top of the list for “how providers are adapting future go-to market plans” are: acquiring more clients directly through technology platforms (57%), building on current client relationships (extending business to family/friends) (55%), and deepening investor segmentation by demographics, lifestyle, etc. (50%).
Competing in a new playing field:
- The Roubini report predicts that in the near future there will be a new global playing field for the wealth industry. Greater wealth accumulation coupled with the democratization of wealth services means that every type of investment provider will have a larger range of potential clients. Investors are likely to shop around and reach out to a larger number of investment providers, thus igniting competition among these investment providers.
- Additionally, alternative investment firms, full-service financial firms, and especially fintechs will become increasingly competitive threats. However, the most worrying competitive threat comes from outside the financial planning and wealth management industry with the use of non-traditional wealth services and investment providers, such as Internet platform companies like Amazon, Apple, Google, and Alibaba.
Focusing on the customer:
- To successfully navigate the often murky sea of change in this industry, a financial advisor should use his or her customer as a compass. One way to stay competitive is by becoming hypersensitive to your clients’ behaviors and expectations.
- The report predicts that one way financial advisors and investment providers will be able to strengthen their understanding of their clients is by using advanced analytics; specifically, “they plan to install CRM systems that provide an integrated view of the customer; use predictive models to identify future investor trends; and set up real-time tracking systems to stay on top of fast-changing customer needs.”
Who will come out on top:
- Many other media accounts are predicting fintechs to be the winners of the wealth management revolution, disrupting the wealth industry like Amazon did for books and Airbnb for hotels; however, Roubini ThoughtLab’s research takes an opposite stance and predicts that this is not likely. The Roubini report explains that “because of the complexity of the wealth services profession and the deep relationships providers have with their clients, fintechs are not likely to follow the same trajectory…in fact, as technology becomes pervasive throughout the wealth industry, the fintech sector is likely to go through a market consolidation – and those startups that offer easily replicated digital solutions may not survive.”
- The Roubini report also explains that “while investors like the convenience, personalization and lower cost of fintech, they are worried about the risks around cybersecurity, brand, and automated decision-making. Rather than putting incumbents out of business, fintech will help them do a better job.”
Incumbents have the edge:
- The Roubini report predicts that instead of fintechs having the edge in the future of this industry, the potential winners may be the incumbent full-service institutions and mutual fund companies.
- Roubini research also finds that the reason these incumbents may have the competitive edge in the future is because, “they are better equipped than others to meet emerging needs for specialized and holistic expertise; they have the capabilities and resources to provide more responsive and personalized services; and they are better placed to comply with professional and regulatory standards.”
For more information on Summit Brokerage Services and our independent financial advisors, visit https://www.summitbrokerage.com or call us at (800) 354-5528.
About Summit Brokerage Services, Inc.
Summit Brokerage Services is part of Cetera Financial Group. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.
About Cetera Financial Group
Cetera Financial Group® (“Cetera”) is a leading network of independent retail broker-dealers empowering the delivery of objective financial planning advice to individuals, families and company retirement plans across the country through trusted financial advisors and financial institutions. Cetera is the second-largest independent financial advisor network in the nation by number of advisors, as well as a leading provider of retail services to the investment programs of banks and credit unions.
Through its multiple distinct firms, Cetera offers independent and institutions-based advisors the benefits of a large, established broker-dealer and registered investment adviser, while serving advisors and institutions in a way that is customized to their needs and aspirations. Advisor support resources offered through Cetera include award-winning wealth management and financial planning and advisory platforms, comprehensive broker-dealer and registered investment adviser services, practice management support and innovative technology. For more information, visit www.ceterafinancialgroup.com.
*”Cetera Financial Group” refers to the network of retail independent broker-dealers encompassing, among others, Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions, Cetera Financial Specialists, First Allied Securities, Girard Securities, The Legend Group and Summit Brokerage Services.