The Future of the Financial Advisor Marketplace

Predictions of Financial Advisor market- 2025 and beyond - That many are afraid to say and accept

Business Models

1. 80%+ of FAs will be RIAs

• ‘Super RIAs’ will become more the norm

2. Holograms (AR) will replace Webinars and Augment face to face meetings Hologram Proof

3. Crypto Currency will become an accepted asset class for invest

4. The acceptance of crypto currency and most importantly Blockchain are employed by all global organization in mass. It will flatten the financial field and create a global financial regulation system in G20 countries; allowing FAs to create global practices

5. Freemium models will arise- Many advisors will offer free services as a way to secure larger clients and next generation (HENRY) clientele

6. “Channel Fees”/Subscription models will dominate per deliverable-(e.g. $100.00/mo to manage retirement portfolio; $10.00 Mo for tax planning; $20.00/mo for college funding/ planning)… so consumer will have more Advisors for each service. You may have 5-6 Advisors for each niche/ specialty needed.

7. The movement to ‘Holistic’ Advisor swing back to super niche oriented advisor specializing in professions and life styles

8. AI/ Decision science - FA's will have AIs that predict investor behaviour beyond simply life events

Client Engagement

9. Artificial Intelligence and targeting personalized content will be used by 80 Percent of the FAs.

10. Financial Advisor will start to engage with VR and presenting content through Oculous, Google Glass, Homido etc

11. Robo Advisor will be leverage by 90% of FAs for seeding and prospecting of new clients and to cross over to next generation clients (About 10% today)

12. 50% of wealth management will be serviced by an artificial intelligence wealth manager (different from robo advisor)

13. Average Book for business will move from current 200 clients to over 500 with the embracing of technology

14. 100% of Advisors will have a website and embracing all digital marketing techniques (Currently around 30%)

15. Gamification of your content and marketing approach will start to become a trend

16. Top Producing Advisors become Influencer, including “shows” on Youtube, AppleTV, Instagram etc.

Other

17. New Innovation in medicine like Stem cell become more mainstream extending life- focus moves from Retirement to Second Life planning and long term care expertise

18. Transhumanisation...Nuero science plug will start to be implemented – FAs will start to consider how to leverage and market through the ‘platform’

19. Financial Advisor styles/ Needs will be more of a life coach and the financial advisor

20. Virtual Assistant: Marketing through devices like Alexa, Siri etc become more prevalent and sophisticated

20.1. virtual assistant that communicates with all my service providers on my behalf

21. Successsion planning and M&A will transact through Zillow and Match.com like service

22. Robot Advisor – Ok…Maybe not until 2035

22.1. Virtual Assistants take on larger role as traditional AA move to more high end servicing of clients;

22.2. Shared assistant operational services become mainstream

23. ESG, charitable giving and donor advised funds are going to explode

24. At Least one brick and mortar (Likely Amazon, SNAP, ANT or FB) becomes a virtual Advisor/ Robo Advisor and competes with Fractional Share/ Fractional Fund offerings.

25. Real time available access to global markets for instant settlement

26. Embedding Skype and/or Zoom on website home page, perhaps as a meeting preference or immediate if available.

Edifying and Detailed discussion:

“The world of Financial Advisory has changed since COVID”.

We would argue that COVID has highlighted changes that have been ongoing in the Financial Advisor market.

Before we expel on the predictions, lets start with some facts of today to frame the conversation:

(1) Growth

“ Invest more in marketing, get more clients” * Broadridge FA Survey

- Advisors who have Onboarded LESS than 10 clients in 202 invested $7.k in marketing

- Advisors who Onboarded GREATER then 20+ clients in 2020 invested 22.2K on average

(2) Keeping Clients

- “77% of Advisor noted lack of technology they lost a client in COVID.

The following are predications over the next 10 years. Some may sound outlandish, BUT all of these are all substituted with actual events, ongoing proof points and data.

The Financial Advisor Now and in the Future

Business Models

Currently, the average age of a financial advisor is 53 and 38% are expecting to retire in the next 10 years. The great advisor divide is generational, Baby Boomer vs. Millennial. Each group has significantly different priorities and business approaches. There is a digital and technology divide. Millennials target other Millennials 51% of the time and Boomers spend most of their time targeting other Boomers. This will likely pay huge

Welcome to the future. It looks far different than just a few short years ago. Science and technology have advanced and transformed the financial planning industry beyond what anyone thought possible.

Before a prospect and an advisor meet, qualifying rounds of one or two virtual

dividends for the Millennial advisor as the $68 Trillion “Great Wealth Transfer” continues at a faster pace. Millennials are very focused on leveraging technology in attracting new clients and Boomers lean on experience and personal relationship building. When it comes to supporting client needs, Millennials choose technology 4x’s more than Boomers.

https://www.nationwideadvisory.com/newsroom/press-releases/fifth-annual-advisor-authority-study-reveals-millennial-advisors-far-more-likely-than-boomer-advisors-to-leverage-technology-to-enhance-profitability-and-attract-next-generation-of-clients

Currently, top tier advisors have learned to adopt technologies and tools that help them prospect, convert and retain clients. During this era, FA’s are losing up to 77% of their clients due to a lack of technology. The Pandemic then quickened the pace of advisor and clients to change business practices. What was once an evolution of change is now a revolution. The tools put to greatest use include phone calls, emails, texting, virtual meetings and podcasts. The advisor website continues to serve as the marketing hub. The website is where most information is available concerning an introduction to the advisor and team, products and services offered, content that is relevant to the advisor’s target market and contact information.

Referrals will remain a primary source of building the book of business, combined with simplified digital lead generation.

We will see a dramatic reduction in the smaller, 10 FA’s or less in one firm over the next few years. This will have much to do with scaling up to massive and necessary technology bursts and associated costs. Local LLC’s will be replaced with large dot coms on the technology front. Artificial Intelligence and expansive technology hardware infrastructure will come at a significant cost.

reality sessions will be held to identify prospect needs and objectives. With prospect needs and objectives in hand, the advisor will turn to AI technology to prepare a plan designed to meet the specified objectives.

Business cases will be illuminated through VR by showing visible, tangible potential benefits of their services. Gamification Visualizations would include retirement, college education, business ownership, marriage, etc. The gamification lifestyle and life events scoring based on AI assisted algorithms will help prioritize products and services to help prospects decide best-of-class advisors and existing clients to optimize their financial planning product balance. Solutions will be provided by such vendors as Oculous, Google Glass and Homido etc. Simple graphs and charts will no longer be used on a limited basis to illustrate planning success.

Integrity, technology pedigree and performance will become paramount in the selection process. Rather than adding 3 to 5 new clients per year, the advisor of the future will be adding dozens of new clients per year.

Super firms will amalgamate and force smaller firms into a position of joining or going out-of-business. Major firms will not be judged according to how many advisors belong, but by their level of technological adaptation and broad array of products and services offered. Technology will be scalable to include the Mass Affluent to the Uber High Net Worth at the National and Global levels.

Smaller firms may attempt to form co-op’s where technology solutions are shared, but, dedicated worldwide syndicated planning firms “Super Firms” will survive and thrive.

During this time period the preferred direction was toward independence and personal success as an advisor. The major influencers are large broker dealers and warehouses. Marketing and operations are at the very local level and are limited to the concerns of regulators and compliance authorities.

Advisors typically recommend to their client’s regarding investment needs to remain focused on the long term and not to panic with occasional interruptions. Advisors should have the same approach to implementing technology for their firm. Technology is increasing and improving at the speed ot the internet. Advisors should do their best to look into the future regarding their client’s expectations and adopt the technology that will enhance the processes to meet those expectations. For example, client needs and objectives are constantly evolving. Technology in the form of risk tolerance and portfolio rebalancing would be an area of focus that technology could enhance.

The public is more likely to trust Google or Amazon more than UBS or Merrill Lynch. This is sobering news for Financial Advisors everywhere. Google and Amazon are trusted industry behemoths and will be a force to be reckoned with going forward. Not far behind are Apple and Facebook. These are very innovative companies with an eye to the future. Fintech developers are already using internet analysis tools to trigger financial decisions. Internet data is ubiquitous and valuable information to fuel consumer product interest and purchasing proclivities. No doubt, artificial intelligence is in the near future when it comes to financial planning prospecting and planning,

https://www.businessinsider.com/embedded-finance-expected-to-blur-fintech-lines-by-2030-2020-10?IR=T

Retail internet aggregators such as Amazon, SNAP, WEChat will leverage their monopolistic growth patterns. Financial service providers will adapt transparent business models in the form of robo-advisors to merge and or open virtual marketplaces for one-stop-solutions for the millions of investment minded customers.

Credit Ease Drive Wealth relationship good example https://finovate.com/drivewealth-brings-robo-advisory-china-new-partnership-creditease/

Engagement

Timely and timeless content will be created and curated to help meet generic target market needs. The content will be manually filtered to flow to prospects and clients based on general assumptions about their life stage. Primary medium will be videos, articles, calculators, presentations and infographics.

Content directed to clients and prospects will be AI-enhanced. AI-enabled autonomous content preparation will be programmed and scaled for individual prospects as well as segmented groups of clients. The content will be scraped from the most credible sources available and

The primary means of sharing the information will be through integrated marketing platforms and CRM’s. Strategically placed one-on-one content will be shared manually and group targeted content will be scheduled. Content vehicles will remain as emails, social media and recorded podcasts and webinars. Content will be supported and shared with the use of seemingly crude and simple binary algorithms.

As a result of the pandemic, nearly all advisors have engaged in virtual meetings via Zoom and WebEx, among many other platforms. Virtual meeting technology has been enthusiastically received by advisors and clients alike. Best business practices are gradually catching up that currently allows compelling two-way video and audio conversations and sharing of content. Another important development is the advent of Webinars in place of Live Seminars. Advisors are contracting with digital fulfillment firms who use technology through sponsored ads to fill the virtual seats.

Advisors will engage in Freemium marketing to engage prospects at all levels. This will allow prospects to “test drive” the client experience with a financial advisor and make an informed decision as to whether to continue. After a trial period of 3 to 6 months, both the prospect and the advisor will determine if client and advisor objectives are a good match. This could be one of the best tools to create a client for life experience. At the end of the trial, the client will need to decide to continue at a cost and/or upgrade the level of service.

https://vimeo.com/showcase/7482261

Heavy emphasis on local geo-targeting for clients and prospects will be the favored business bias. This is primarily due to the advantages of current engagement tools that are preferred by advisors and their prospects and clients. Looking people

delivered in the most compelling messaging medium possible.

The content sharing medium of the future will replace static videos, articles, infographics and calculators and will be presented as an avatar enriched VR or advisor Holograms. The presentation will be enabled to stop for questions and give compelling best interest responses.

Freemium will be universally accepted as a best business practice to engage prospects. In the beginning stages, prospects will pursue a virtual introduction and engage with the financial advisor. Using AI as a key differentiator, scenarios will be shared and accepted at no cost. Following an established period of time, services will be upgraded based on collected data and AI influenced choices made. This will be a very high level of service that takes into account lifestyles as well as life events.

The worldwide economy and multiplying technologies that create a “world is our home” market mentality will make local geo marketing obsolete. The new normal will be for clients and advisors to have a very high level of comfort through the communication tools, currencies, products and services that financial planning firm will offer personally and virtually.

Into the future, Transhumanism will be the science and reality of transforming individuals to levels above and beyond their mortal capacities of intellect and physical health. This will allow the human brain to be a receptor of enhanced intelligence, augmented by seemingly infinite downloaded levels of

in the eye and shaking hands is important for trust and acceptance. An important part of the advisor’s brand is locality and community involvement and local social validation and recognition.

knowledge and artificial intelligence. Ethical limits certainly need to be considered and channeled by laws and governance yet to be considered, let alone understood.

Compensation Structure

The traditional advisor fee for service model is a percentage of Assets Under management, typically around 1%. This model does encourage and incentivize favorable results for both client and advisor. However, the client does own the greatest inherent risk as the asset owner. Alternatively, advisors will receive a pre-determined fee for services rendered as an hourly rate or a packaged price for planning and investment services. This pricing model will be agnostic relative to losses or gains. Again, the client carries most of the risk.

Another advisory firm service and compensation trend will be for multiple advisors to cluster according to niche markets and amalgamate their planning specialties. Fees will be assessed on a subscription basis and according to a holistic planning model that is defined according to the unique needs of the client. For example, a younger family may require immediate college funding planning for their child or children and retirement accumulation for themselves. The college funding may be provided at a subscription cost of $50 per month and the retirement accumulation may cost an additional $75 per month, totaling $125 per month. Two separate teams will then work independent of each other to provide the deliverable. It is projected that approximately 90% of advisors will feature Robo Advisor services on their website.

Robo advisor technology is gaining momentum as a modern and trusted strategy to shape an investment strategy that is objective oriented. Complex and sophisticated algorithms provide the investment mix utilizing Exchange Traded

Fee models will continue to evolve into a direct and objective reward incentive for the advisor. Fees will be weighted to investment gains month to month, quarter to quarter or year to year. No gain no advisor compensation, down to a negotiated minimum.

Manual investment models with a human subjective touch will be at a minimum. Robo advisors with the intelligence of a supercomputer will be the norm and will be programmed to meet stated objectives for purposes of accumulation and/or distribution. This technology will take into account optimized tax, cash flow and legacy planning goals and objectives. All Robo technologies will require approval of industry regulated stress tests to insure any and all economic forecasts and/or outcomes are mitigation oriented.

The advisor of the future will also incorporate a Freemium virtual reality entry into the relationship. Virtual Reality will allow examples of investment philosophies and will illustrate the potential gains given assorted scenarios and stress

Funds (ETF). Common asset classes that Robo Advisors invest in are Equity Markets, Bonds, Foreign Exchange, Gold and Cryptocurrencies. The investment balance will be predicated on the client’s investment objectives. Generic lifestyle desires are factored into the overall financial plan, but the primary overall objective leans heavily into accumulation of assets and minimal cost of risk management solutions.

Crypto Currency

Nationalized monetization for buys and sales of assets and securities will be gradually discontinued and replaced with global cryptocurrencies. Cryptocurrency is immune to fraud and identity theft and has broad acceptance as a digital currency. Blockchain helps maintain the transactional integrity of any settlements. Cryptocurrency is becoming a transactional favorite due to the ability to purchase and own assets immediately and is accessible around the world. The two most preferred cryptocurrencies are Bitcoin and Ethereum and have been around since 2009.

Cryptocurrency will become the global norm for financial planning investment products and services. New applications of blockchain technology will completely disrupt the use of national currencies and pave the way for unleashed global trade and exchange.

Business Practices

Average number of clients per advisor averaged between 100 to 150. At the most 200. This required that most advisors be very nimble in meeting client needs and forced them into an all things to all people business plan. Due to the pressures of an aging financial advisor base, succession needs have further complicated the advisor and client relationship. Advisors age 60 or above are perceived by GenX and Millennials as too old to complete their financial planning goals. Generational gaps prove to be counterproductive regarding the implementing of technology and communication. This leads to challenges regarding succession planning.

Behavioral finance objectives are becoming more and more dependent on Environmental, Social and Governance (ESG) objectives. This is at

The Advisor of the future will far more engaged with technology, as will their clients. Onboarding a new client will be far more about utilizing very sophisticated engagements via VR and Artificial Intelligence. The clients quality of life and lifestyle adaptations will be the primary input criteria for optimizing quality of life solutions. For example with the birth of a child or grandchild the AI component of the financial plan will rebalance the investment plan and portfolio to add a 529 plan to meet educational expenses 18 years from now. A will or trust document will be updated accordingly and virtually/digitally signed. The future holds great expectations and

variance to the traditional investment rational of competing yields and costs. This is leading investors to integrate social consciousness into their goals in the form of charitable donations. Everyone desires clean air and water, as well as world peace. Charitable organizations and non-profits are multiplying rapidly as a result. Financial advisors are wise to integrate an additional form of planning that will facilitate social justice causes into the holistic planning model.

Global climate change has introduced investment sensitivities and conscience that is unprecedented. Investors, many of whom are very high net worth are very connected to the environment and global health. They want their investments to be like minded and governed by environmental and social order that do no harm to the planet and humanity.

The trend of Straight-through-Processing (STP) at the advisory firm level is accelerating. FinTech’s within the financial services industry are rapidly developing and deploying platforms that include marketing, onboarding, transactions, compensation and back office needs. These technologies are being developed for firms with a critical mass advisor count of 10 or more due to scalability costs and access to technologist resources. The technology stacks are being built through acquisitions as well as integrations that compliment needed STP components. For smaller firms, widgets and ASP’s are bolted together but are very basic and require manual intervention to engage and process.

possibilities to assess holistic planning needs and generate solutions.

The era of the “Super Advisory” is just around the corner. These firms will optimize their practices with at least 500 or more clients and will a minimal number of licensed advisors. Why? Because most planning and communication with be automated and heavily influenced by technologies that will be controlled by AI. Their reach will be around the world. Able to work directly with technology assisted language assimilation.

Regulatory supervision will replace national level rules and laws with Global rules and laws. FINRA may serve a few legal needs such as customer complaints, but rules of engagement, transaction and fulfillment will be globally controlled and influenced.

The future FA will be far more socially aware and will help facilitate Environmental and Social Governance (ESG) into the planning model. Since ESG has no boundaries, including potential inter-planetary investments and proprietorships, it will require compounding regulatory effort and agreements to meet the need and the demand. Rather than just owning a “Piece of the Rock”, investors will be heading toward “infinity and Beyond” in their portfolios.

Straight-through-processing will be hosted by cloud-based solution stacks that will be scalable. AI will be the differentiator as FA firms shop for and select a solution set best for their needs.

Succession Planning

In plain terms, an advisor must find a successor for his/her clients before they separate from their financial planning business. The three primary components are:

1. The right price

2. The right model

3. The best adopted business practices

Sophisticated commerce and transaction-based technology similar to Zillow is beginning to provide online access for advisory firms to buy and sale. This technology is developing and coming to a merger/acquisition near you soon

Succession planning is more a matter of machine assimilation and continuity to provide seamless service forever. Valuing the firm will include the value of AUM as well as technology adoption. Best-in-breed software that will encompass all phases of the client experience will be evaluated and judged according to client growth, asset growth, retention and satisfaction to determine the firm’s value. When an individual advisor desires to join or purchase, valuation algorithms will determine value.