The Uberization of Financial Advisors

This Is What the Uberization of Financial Services Looks Like

•  3 minute read

The universe of financial advisors is changing. The independent model is increasingly drawing attention among people and will continue to gain momentum. Here are some basic tools for financial advisors to gain further patronage.

2016 could be the year that financial advice “goes indie.” That’s why the hottest job in my industry this year isn’t a new gig. It’s the independent financial advisor.

This Is What the Uberization of Financial Services Looks Like

At the end of 2014, the big national securities firms managed 38% of retail (consumer) assets. This number is down from around 50% before the financial crisis. The share held by independent advisors has almost caught up: it’s at 36%. When we launched HighTower in 2007, we predicted that crossover was inevitable where independent financial advisors would advise more assets than the large brokerage firms.

 

Today, leading industry research firm Cerulli Associates predicts that independent advisory firms may edge ahead of the major brokerages as early as this year.

 

This shift has been a long time coming, and we predicted it years ago.

 

The big securities firms are full of smart people who care deeply about their clients. But their profit center is designed around selling financial products they’ve manufactured. The independent model by nature is more inclined to prioritize the client’s best interests.

 

This two-minute video spells it out:

 

 

To understand why things are changing, think about Uber.

 

Uber retooled the existing transportation system to give the passenger a MUCH better experience. Instead of forcing you to flag down a taxi, Uber sends a car right to you. Rather than subject you to a dark, smelly backseat with a blaring TV screen, Uber’s fleet is made up of cars that you’ll actually want to ride in. And when it’s time to pay for your trip, no taking chances with a broken credit card machine or digging around for cash. It’s done automatically.

 

The whole experience is designed around the passenger.

 

We’re doing the same thing in financial services. We’re causing the systems to work for the client and the advisor.

 

table-stakes

 

Beyond the table-stakes financial planning and investing qualifications, the two most critical elements for success as an independent advisor today are as follows:

 

  1. Be tech savvy.
  2. You need a presence online. Every one of your future clients will Google you before they meet you. You must be accessible via emails and text messages. You must make it easy for clients to access information about their money anytime, anywhere on a mobile device. If they can track a pizza with an app, why shouldn’t the same be true of their portfolios?
  3. Counsel clients in the context of their overall financial wellness, not just their portfolios.
  4. Technology is critical, but so is nurturing a human connection. Money is personal and emotional. It directly affects our relationships, our stress levels, and our overall well-being. Case in point: 82% of survey respondents in their late 40s with dependents said they feared running out of money more than death (Allianz). And 20% of Americans would go without sex for 6 months (!) in exchange for relief of financial stress (Consumer Credit Counseling Services). One last observation on the hottest job in financial services: this opportunity is especially robust for younger professionals.

    Avant Advert

     

     

    The average age of advisers is currently 51.

     

     

     

     

    43% are older than age 55.

     

    And you don’t even have to let strangers ride in your car.