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  • by Michelle Rohrbach
  • VP, National Strategic Advisors, TD Ameritrade Institutional

Competing in the age of digital disruption

“If you don’t figure this out in the next three to five years, your businesses will stop growing, and eventually fail.”

This is what Joe Duran, CEO of United Capital told a room full of RIAs at a National LINC 2018 pre-conference general session.

Joe was talking about adapting to the tremendous digital disruption in our industry. But he was also speaking directly to what he sees as a critical philosophy shift that RIAs make from being wealth managers to financial life managers.

“The value that you as an advisor brings to the client has changed,” said Joe. “And you’ve got to be delivering value in the way that’s most relevant to each and every client.”

With the unprecedented wealth of the Boomers about to transition to their younger millennial heirs, advisors will be forced to shift the way they deal with clients if they want to keep those assets under management. As for all the new wealth being generated by younger generations, the same shift is required to win those new assets.

And it’s not just about technology. Yes, advisors will be required to provide a simple, intuitive way to share information and advice on their clients’ mobile devices. Yes, they’ll need to have a better understanding of bitcoin and other cryptocurrencies as investment vehicles, as well as how blockchain and other advances will affect traditional markets.

But more than that, Joe is adamant that RIAs need to start acting as “financial life managers” by understanding a few key fundamentals.

Markets are average. People are not.

The markets will perform the way they will perform. Advisors are past the point where better portfolio performance is something they can claim to offer reliably. Robo-advisors, pre-built asset allocations, and inexpensive ETFs are turning financial advice into a commodity.

The real value of a financial life manager is that they understand how unique and special each client is. What are their struggles? What are the fights they have with spouses about money? What are the decisions that keep them up at night?

Artificial intelligence can’t make someone feel special or understood. Only another human can do that. And younger clients expect someone who understands them and personalizes service around them.

Understand your clients

The type of advice you’re giving needs to evolve as your clients evolve. Wealth managers have traditionally been focused on the business of prepping for retirement and managing assets on upon retirement. While the importance of these two phases of financial planning hasn’t changed, what has changed is the idea that these are the only two phases. In fact, your client’s biological age and life stage are two of the critical determining factors in how financial life management services should be delivered.

Millennials: financial literacy
From the time they graduate college through their mid-30s, your potential clients are building their careers. They haven’t yet hit their peak earning years and are more concerned with setting up a life for themselves – marriage, purchasing a home, having children.

At this stage, there’s not a great amount of wealth to manage, so it’s a critical time to focus on financial literacy. By helping them understand key financial concepts now, you’re positioning yourself as a tremendous advisor in later life stages.

Gen X: optimizing life choices
As this cohort moves into their prime earning years, the role of the financial life planner shifts into helping make the smartest financial decisions. Should we buy the bigger house? Can we afford a two-week vacation? If one spouse wants to dial back their earnings to spend more time with the kids, how will that affect the family’s finances long-term? Do I need to re-up my term life insurance?

These are the money questions that keep this group up at night. While their incomes are high, they haven’t yet accumulated wealth that needs much managing. But helping them get that wealth by making smart life choices is where you can add the most value.

Live where your clients live.

“American adults spend up to five hours a day on their smartphones,” said Duran. “If you’re not there, they’ll find an advisor who is.”

While client service matters in every industry, when it comes to something as personal as financial advice, it matters even more. And now, when consumers have more options than ever before when it comes to getting investment advice, creating a client experience that’s unique, personalized, and memorable is more important than it has ever been. But more critical than ever is delivering that experience in a way that is relevant for clients. And that means being where they are, on their smart phones.

The bottom line

Changes to the industry–robo-advisors, advice on the cheap from the big mutual fund shops–mean that differentiating yourself based on how well you understand your client, how relevant you are to their needs, and how proactively you serve them are more important now than ever before.

Creating a client experience that differentiates you from competitors and earns organic referral growth is a long game. And it’s something that only a human advisor can do. Understanding each client’s special and unique needs, and meeting them where you can provide the most relevant value to their lives is the way forward.


TD Ameritrade and United Capital are separate and unaffiliated and are not responsible for each other’s policies or services.

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