While no one knows what the future holds, it’s clear that prevalent trends and shifts are significantly changing the way firms operate. These developments are creating valuable opportunities with the potential to strengthen individual advisor-client relationships while driving overall practice expansion.
Key among these shifts are:
- Generational transitions: While the $72 trillion generational wealth transfer continues to dominate headlines, two other movements are quietly gaining momentum: baby boomers entering retirement and selling their private businesses, plus Generation X hitting their peak earning and investing years. Forward-thinking advisory firms are already positioning themselves to capitalize on these trends.
- The rise of AI: 91% of financial services companies are assessing or already using AI, according to industry research.1 While AI excels at simplifying workflows and automating routine tasks, its greatest potential is in enabling advisors to become IA – “informed advisors” – who understand what clients need and customize the financial experience to meet those needs.
- Alternative investments: From private real estate to commodities, many financial advisors are incorporating alternative investments to help clients access new opportunities and build more resilient portfolios.
- Enhanced technology integration: Advisors have long struggled with fragmented client data. Today's technology solves this challenge by integrating all client information into a unified view. With a complete picture of each client's financial situation, advisors are better equipped to craft strategic financial plans and offer relevant guidance when it’s needed most.
Successful firms are leveraging these and other trends to not only stay viable, but to gain an edge as the landscape continues to evolve.
Apply change management to adapt to industry evolution
Whether firms want to incorporate alternative investments into their practice, introduce AI tools, or implement another initiative, change management can make it easier to adapt. Change management, or managing the human side of change, is the bridge between strategic planning and successful execution, yet it’s often overlooked in the planning process.
Beyond an understanding of new products or technologies, firms need a change management strategy for shifting mindsets, processes, and behaviors throughout their organization. One way to get started is to focus on the 3 C's:
- Current expectations: Begin by clearly documenting how your team currently operates and what clients expect from your services. Understanding these existing patterns and expectations provides the foundation for planning effective changes and helps identify potential resistance points.
- Communications: Getting everyone on the same page requires consistent communications. Regular progress updates, clear messaging about the reasons for a change, and multiple channels for team feedback prevent misunderstandings and build buy-in throughout the transition.
- Compensation: Incentive structures must actively support any new behaviors you want to encourage. When compensation structures don't support new behaviors or objectives, even well-intentioned team members will struggle to prioritize the changes needed for successful transformation.
Change can be overwhelming, but with the ever-evolving wealth management landscape, change is the constant. Using an effective change management framework when implementing change can ensure a smooth transition for a team.
Balance technology with personal service to stay resilient
While technology may be integral to the future of financial services, successful financial advisors balance advanced technology with a human touch. The financial planning process is a good method for sparking connections with clients and gaining their trust, where advisors can:
- Uncover and address the financial problems clients are experiencing. For younger clients, this might mean money management issues or a lack of savings or access to capital.
- Discuss important issues like health costs – the #1 reason for bankruptcy in retirement – and make sure those are being accurately planned for.
- Use interactive technology like Lifestyle Studio from Envestnet Wealth Studios to engage clients in planning and enable them to become co-creators in shaping their financial future.
- Leverage AI tools to identify tax-smart harvesting opportunities, plot asset consolidation opportunities from behavioral signals, auto-generate meeting briefs based on client portfolios, trigger proactive outreach around client milestones, and perform other high-impact actions.
Asking questions to understand what clients want to achieve in life – beyond accumulating wealth – is critical. Truly understanding clients’ goals can help advisors uncover more areas to deliver services and products to not only drive revenue, but help their clients live better lives.
“My mother deserves to go out and live her life, but was afraid she couldn’t afford retirement because her advisor didn’t ask the questions that he needed to ask. Had he done that, maybe she could have spent her golden years, the most important years of her life, visiting friends and family and spending her money freely.”
Blake Wood, Head of Platform Strategy at Envestnet
Through human connections and data-driven insights, advisors can uncover what clients truly want and support them in attaining it.
Treat industry shifts as opportunities
Regardless of how the future unfolds, advisory firms can prepare by investing in intelligent technology, team-based business practices, and client relationships. With the right tools, processes, and relationships in place, firms can build practices that not only weather change, but use it as fuel for growth.
Visit www.envestnet.com/wealth-management/software to find out more about how our technology can help support in navigating the future of financial services.
