The Asset Strategist Will Take The Financial Adviser's Clients Away

It's official. US Advisors confirm it. The asset strategist will take the financial adviser's clients away. It's not a matter of if, but when.

That incredible market influencer, Brett Davidson, sent yet another article across to me this week that he'd read from America. He says it reminded him of what I'm doing. The article was published in Advisor Perspectives by the non-BS marketing and lead generation guru for financial advisers, Sara Grillo.

The full article is referenced at the end of this article.

Sara talks about Advice-only Financial Planners. From what I can gather, these are SEC-registered advisers that give specific advice on regulated securities and investments without executing that advice on behalf of a client or managing the investments advised.

This role differs from Non-intermediating Financial Planners (sometimes referred to as Asset Strategists). As NIFPs give general advice on the client's total wealth, wealth creation strategies leveraging intangible assets (such as know-how), and plan the client's wellbeing before implementing the asset strategies to support it.

I'm not saying this because I'm an asset strategist; I'm an asset strategist because I'm saying this. So, financial advisers. Instead of rolling your eyes and ignoring what Sara and I are telling you. Read on.

Let me make things clear. I'm not here to bash financial advisers. I was one until 2019. I jumped ship to a new paradigm. I think you do a great job with a narrow part of the market that's fast disappearing. I'm here to offer you an olive branch, a perspective on what's happening here and now. And to present an opportunity for you to reskill in an area of rapidly emerging opportunity.

It may be that the financial adviser's market is around long enough for you to eke out enough income through to your retirement. And maybe the consolidator that will buy your business to leave you that tidy nest egg you are relying on as your pension won't see it coming either.

[1 in 4 unretire anyway, as it's good for your health and finances.]

Or maybe something is published by the regulator in July to be implemented in the Spring of 2023 that accelerates your decision. Who knows for sure?

But here's something for your back pocket. As a contingency plan. Just in case. The asset strategist, non-intermediating financial planner, or advice-only financial planner.

Why might this happen?

Financial advisers focus more on products than on the choices and challenges their clients face today.

It's easy money.

It's a difficult habit to break once you've got those clients locked in and you are hooked on tapping into client assets for fees.

It's not even the client's total assets. It's just the five per cent that are regulated investments.

You don't even have to show them how to make money. You say this, that, and the other about shiny objects, and they hand over money they've already made to buy your regulated investments.

You don't even have to worry if the client chooses this life path or that life path. What the heck? That's their choice. When they bought your assets, this was where they were, right then. You've got the documents to prove it. This line on page 157 covers your back. No matter whether your strategy can be unpicked or not. It's just the way things are.

Don't get me wrong. Selling a product is excellent for the right person. Get them young enough for the miracle of compound interest to weave its magic over time. Get them prudent enough to be happy with their chosen lifestyle on the lower-income net of investment. Get them disciplined enough to invest regularly, and stay invested through the highs and lows of markets. And have them drawdown in the right way to minimise lifetime taxes, and ringfence their residual estate sufficiently to avoid death taxes. The trouble is few meet this criterion.

But many of you are not talking to young people are you, you ignore Gen Z. You have an investible asset threshold of ￡100,000 for you to sniff at and get out of bed. And only wealthy Boomers meet that criteria.

Some are, and I get that. Well done to you. Pat on the back and all that.

The trouble is, wealthy Boomers are in drawdown now. So that ship has sailed. But I digress.

Selling a product isn't the optimal strategy for everyone, but that has not been the goal – a "solution" only needs to be good enough to be sold to undiscerning clients on the strength of the adviser's personality and likeability for this model to work.

The non-intermediating financial planner movement

You say I don't have time for these theoretical ramblings from jealous empty business owners who aren't even regulated (to sell financial assets that's five per cent of net worth in a commoditised market).

Don't you?

Well, guess what?

Unregulated asset strategists who sell plans, not products, will take your clients away!

While doing so, they may not only earn the business of those underserved Gen Z you ignore but also the millennials, retiring Gen Xers, and even some of the millionaire Baby Boomers – whose assets you are tapping into for two-thirds of revenues.

An asset strategist or non-intermediating financial planner (NIFP) offers only financial planning services without the requirement or expectation to manage their clients' assets. It is ideal for people with high planning needs, who can manage five per cent of the net worth they hold in regulated investments on their own with some initial guidance.

A NIFP does not have advisory or discretionary authority over assets. They shun investment distribution and management completely. Suppose the client wants specific advice on this regulated investment [for five per cent of their net worth in a commoditised investment market where choice doesn't matter]. What then? In that case, the planner refers them to a?flat fee adviser, preferably one who won't shove the client's money into nonsense products.

Let me be clear: An adviser who offers standalone planning with an intermediating option is?not?a non-intermediating financial planner.

Non-intermediating financial planning is suitable for clients who:

• Can listen to instructions
• Can use technology, preferably an end-user financial planning app integrated to open banking tech (e.g., HapNav)
• Want to manage their assets
• Are willing to learn new skills in groups
• Do not want to delegate
• Shun the shiny objects
• Have a penchant for passive investing
• Are not lazy
• Are looking for value for money

This approach is not suitable for clients who:

• Need hand holding
• Are not open to learning new skills
• Want to delegate
• Don't want to learn anything new
• Want the advisor to invest in shiny objects for them
• Are lazy
• Don't mind what they pay, just so long as they see a return (challenging in today's market – that advisers have zero control over)

This approach is suitable for advisers who:

• Don't mind going out to market themselves
• Are modest and resourceful
• Are consultative and analytical
• Love analysis more than implementation
• Are good at listening to clients
• Want their clients to be free
• Can explain things without confusing people
• Want to work with clients who DIY [or the rest of the world]
• Are willing to put the client in control of how they work with you

This approach is not suitable for advisers who:

• Want to make their clients dependent upon them
• Want to make their clients stuck
• Love pitching the next shiny object
• Love carrying out administrative or operational tasks
• Don't want their clients to be free
• Only want to work with clients who delegate
• Want to qualify for "the conference" via quota
• Confuse people, whether intentionally or not
• Don't believe in financial planning
• Want to shout at the Bloomberg terminal all-day
• Want to control their clients
• Want to lock their clients up into long-term arrangements
• Want to stake their reputation on the vagaries of markets they have no control over

?

The Seismic Shift

I hate to upset you, but our networks here and abroad already have been doing that for years, and you keep reading these articles.

Non-intermediating financial planning is the least-conflicted form of financial advice that has existed throughout history. It shifts the focus entirely to service and away from the sale, the products, the confusion, the lockin.

Non-intermediating financial planning offers the maximum possible value that an adviser can provide. The adviser is paid for their advice, skill, and time; their pay is unrelated to any products.

And guess who's seeking them out! Not just the broke Gen Zs; even the affluent Baby Boomers are!

?

Criticisms of the NIFP model

Most of you are making too much money tapping into trapped assets for fees to make a full-scale shift to becoming NIFPs (remember that means planning only, no regulated investment intermediation).

I get it.

This article is not an indictment of any particular fee model. Instead, I want to encourage advisers to offer?standalone planning?as a service – or even better, to become non-intermediating financial planners and offer the whole kit and caboodle.

Every time I suggest that I hear:

• It's "baby money."
• It's all DIY clients, and I'm not too fond of those.

[It can be buy-to-let property landlords, the 1 in 3 workers with public sector pensions, the rest of the workers in auto-enrolled pensions, the self-employed whose businesses are their assets, the clients of discretionary management firms, clients already in drawdown … does that leave anyone left?]

• It's not profitable (hard to believe, since the only costs are sunk costs like the software you already paid for - our software is free to planner).
• It's transactional, not a relationship. [Favourite future is an ongoing conversation – think again]
• A one-time plan doesn't go deep enough. [It's an ongoing plan, think groups and Netflix-style subscription models]
• I can't track my hours.
• They're going to harass me over every penny I bill them for.
• It's too much Liability for the amount I'd be paid [Liability? I think you're thinking about regulated activity – here. PI insurance is ￡80 per annum, not ￡60k!].
• They're going to stiff me.

Did I hear violin music playing?

Objection – overruled!

Okay, advisers, listen up.

I am going to tell you very clearly that there is a shift in consumer preference that is staring you in the face.

I am telling you?now.

If you choose to ignore it, remember that historically things have not worked out too well for those who ignore significant, prominent marketplace trends.

There will be a decoupling of financial planning and investment management, with planning being where the higher margins are and investment management being increasingly commoditised.

In fully commoditised markets, there is no room for intermediation.

This decoupling has already started. I am hearing advisers say, more and more, that?high-net-worth prospects?are coming to them asking just for a financial plan. And before you say those prospects are undesirable and broke, check out Sara's article for the success stories on the other side of the pond.

https://bit.ly/3OtFQvx

If you want success stories on six continents or to be the next success story, check out my website.

www.academyoflifeplanning.com