In an industry where widespread change was already underway, there’s a new wave of evolution ahead—and much of it will be for the better.
I write this in the midst of week 4 of our nationwide stay-at-home initiative. Like most others, I’m trying to be productive while remaining safe—the latter, I hope, is my small way of mitigating the potential burden on our over-taxed healthcare system.
The truth of the matter is that we, as a country, have weathered many other crises in our collective past, each of which was unique in its circumstances and impact. What we know of this particular crisis is that it has proven to be a great equalizer: Regardless of who you are, where you live, or how much money you earn, you have been impacted personally, professionally and/or financially.
As someone whose professional life has been focused on the wealth management space for over two decades, it feels to me like we are at a universal inflection point. There was already a tremendous evolution underway, one that began after the financial crisis in 2008 and progressing ever since, fueled by these five key drivers:
- Changes in client mindset which propelled changes in advisor sentiment—with advisors becoming even more focused on being true fiduciaries and worrying less about short-term financial gain.
- Advisors overcoming inertia, emboldened to seek greener pastures.
- The independent space becoming mainstream, with an ever-increasing number of success stories serving as proof of concept for prospective breakaway advisors.
- The on-going attempts of big brokerages to tighten the reigns on their advisors via retire-in-place programs, which have actually had the opposite effect, that is, resulting in more advisors opting to leave their firms as opposed to opting in.
- Advisors becoming less reliant on big brand names and much more confident in client relationships and their own abilities to succeed.
Advisors now have a new lens through which to view and evaluate their business lives and the firms they work for—that is, the lens of crisis. And everyone is asking themselves questions applicable to their experiences throughout the past month:
Has my firm been a good partner?
Are they allowing me to communicate freely, creatively and openly with my clients?
Have they given me the support I need to enable my staff and me to work as efficiently as possible in remote settings?
Are they providing me with solid leadership and offering the right tools, research, inspiration and confidence to help me and my clients today and into the future?
While we find ourselves in unprecedented times, we can still make some predictions about how we expect the wealth management space to further evolve in a post-COVID-19 world:
- Newton’s Law of Motion will apply — Those advisors in motion will stay in motion, and for some it may accelerate moves away from their firms as frustrations become more apparent. Conversely, advisors who were inclined to stay put before the crisis will continue to sit tight, if they believe their firm has been a consistently good partner.
- Restocking the pipelines — All wealth management firms are eager to put their foot back on the gas in terms of recruiting. While the coronavirus has forced them to put a pin in many of their efforts, the firms are ready and willing to engage whenever advisors are.
- Deals will serve as a driver of movement — Many advisors who are seeking a wealth replacement strategy and those whose businesses have not fared well will head towards firms that offer aggressive recruiting deals. So, we expect the wirehouses and other firms like First Republic and Rockefeller Capital Management to be the big winners in the race for top talent.
- A wave of earlier-than-expected retirements — Many advisors will choose to accelerate retirement plans because this crisis is the last one they’ll want to experience in their careers. By signing on to their firm’s sunset programs, they’ll find the path of least resistance.
- An increase in teaming — Many solo advisors have found it difficult to get through this crisis without the emotional and intellectual support of partners. Forming a team will give them more cover and the confidence that comes from being part of a like-minded group, all steering in the same direction.
- Embolden the best advisors — We’ve heard from many that this experience has helped them to shore up relationships with their clients, building trust in ways like never before. Portability will become far less of a concern for those who eschewed the notion of a move in fear that their clients would not follow.
- An acceleration toward independence — As many employee advisors recognize the obstacles of communicating freely and creatively with their clients during this crisis, the appeal of independence will become even more palpable for those who are entrepreneurially-inclined.
- More advisors will opt to work remotely — Advisors are finding that conducting business from home can be quite efficient. In fact, the time they’ve gained from not commuting has had positive impact on work-life balance. Technology has enabled interactions in ways that make the necessity of being in an office less critical—and as such, more advisors will want to continue to work remotely long after the crisis passes.
- Creativity and ingenuity will continue to thrive — Advisors have been forced to act and think more creatively throughout this crisis and, as such, will demand more freedom from their firms to continue to do so. They’ll be inspired by new ways they’ve leveraged technology and used their own voices to communicate with clients—and many will find it impossible to go back to a world with limitations.
- Advisors will look for ways to add greater value — This crisis has brought to light the necessity to think beyond production and instead place greater focus on “giving instead of getting.” I’ve been inspired by the stories advisors are sharing with me about how they are adding value for their clients during these difficult times—from helping them navigate the government stimulus programs, to “being there” to comfort their fears and frustrations, as well as participating in lighter conversations around recipes and movie suggestions. This is a shift we expect will continue as advisors come to appreciate the long-term benefits of nurturing relationships.
It’s often the most challenging of circumstances that drive us to see things differently. We were all thrown into uncharted territory without warning and as we’ve adapted, so have our perspectives. In the wealth management space – where change had become the new norm – we anticipate that business owners and individual advisors will also walk away from this crisis with a refreshing new perspective—one that is more purposeful and mindful, leaving them more open to new ideas and opportunities than ever before.