In the year and a half since the beginning of the pandemic, the financial advisory industry has undergone massive change, impacting the way financial advisors practice their trade as well as the behaviors and habits of clients. Much of that change was underway before COVID but has accelerated or come more sharply into focus because of it.
Advisors have done well to adapt to changes precipitated by the pandemic—becoming adept at virtual communications and navigating the uncertainties of a troubled economy. However, in the wake of these changes, several issues continue to overshadow the industry, requiring advisors to switch from survival mode to aggressively managing them not just to survive but to thrive.
In the next couple of weeks, we will delve more deeply into some of these issues, the challenges they present, and how advisors can meet them head on for a greater chance at success. Among the many vital issues advisors are facing right now, here are four they must contend with in the immediate future.
1. Continued fee compression
Fee compression has been occurring for some time. But it seems to have accelerated some, now hitting all corners of the industry at a time of increasing research, regulatory, and technology costs.
Clients are inundated with information about low or no-cost funds and zero commissions. So how do advisors compete?
However, it has also been shown that clients value a trusted advisory relationship, especially when it is the source of highly personalized advice and attentive support. Going forward, advisors don’t have to join the race to the bottom of the fees they charge. Instead, they need to be able to demonstrate to their clients why their higher fees are worth it.
2. Getting lost in a sea of average
The commoditization of the financial advisory industry was occurring well before the pandemic. But as ambitious financial advisors continue to strive to be different, it becomes more difficult to stand out.
It’s no longer enough to be “client-focused,” offer comprehensive financial planning, or even superior customer support as a way to differentiate yourself—those are just table stakes to play in the game now. Differentiation is the key to getting prospects’ attention and making you more referable to your clients.
Clients have learned to ask more questions during the last year and a half and expect much more from their financial advisors. If you can’t measure up, you will be passed over in favor of advisors who can clearly demonstrate their excellence in managing their client relationships. From this point forward, creating and delivering upon a unique value proposition needs to be your central focus.
If you need help creating your value proposition and escaping the commoditization of our business, check out the training program ‘Become Brilliant at the Basics: What They Don’t Teach You in Training’ – available as a self-paced program (always open!) or as a 12-week coaching program (open only a few times a year, available to 25 Advisors at a time).
3. Technology is advancing at digital speed
Throughout the technology revolution, financial advisors have been notoriously tech adverse. The pandemic forced many tech-challenged advisors into the deep end of the technology pool, which is a good thing. Now especially, clients expect tech-centric experiences in all aspects of their lives. You may have learned how to master virtual communications because of the pandemic, but the digital world continues to evolve rapidly, and your clients are at the forefront.
The use of technology, such as digital marketing, not only enables you to communicate with your prospects and clients on their level, it can also scale your marketing and client relationship efforts so you can compete with the big boys. It’s a considerable investment but, done right, it can generate a massive return on investment.
4. Staying top-of-mind with your clients
When your clients are experiencing a life-changing event or a personal crisis, who do they think of? If it’s not you, you may not have the relationship you thought you had with your clients. If the pandemic and the volatile stock market of 2020 taught us anything, it’s that clients want to know their advisors are there to help them during times of crisis. Maintaining top-of-mind awareness among your clients is more critical than ever.
You can no longer hide behind impersonal email campaigns that do little to connect with your clients. Plus, your clients’ email boxes are constantly jammed with dozens, maybe hundreds, of irrelevant junk.
If you want to be the first person your clients think of when it matters most, you need a strategy that puts you top-of-mind. If you’re going to communicate by email, you need to cut through the email fog with relevant and personalized email subject lines. Emails with links to videos or podcasts you produce are more likely to be viewed. Other things you need to do include:
- Join them on LinkedIn, Facebook, and Twitter to become part of the conversation.
- Reach out with a phone call for no particular reason except to see how they’re doing.
- Send a hand-written note inside a hand-written envelope.
- Invite a client a week to breakfast or lunch.
Finding every possible opportunity to stay top-of-mind with your clients is a way to stand out as an advisor who is genuinely committed to providing them with an exceptional client experience.