The opportunity for growth has never been greater for financial advisors. U.S. household assets are expected to increase from $87 trillion to over $140 trillion by 2030 – of which nearly $64 trillion will be in investable financial assets – leaving between $150 billion and $240 billion in wealth management fees available for advisors to potentially bring under their management.1 What’s more, millennials will soon come into an unprecedented transfer of wealth, as they inherit $68 trillion in assets from their parents over the next 20 years. 2
Very soon – if not already – these investors will seek out financial advisors to help them maximize and protect their finances, and those who are actively preparing their business to meet their needs will be better positioned to serve a greater share of the marketplace than ever before. We believe this preparation involves a shift in the role that the advisor plays, to that of an “essential advisor.”
The essential advisor is more than a stock broker, asset allocator, or financial planner. The essential advisor seeks to deliver financial wellness by providing advice based on the full scope of an investor’s financial situation, connecting every aspect of their clients’ daily financial lives to their short-term needs and long-term goals, tied together with a comprehensive plan. In doing so, they become an indispensable partner. This type of advice balances everything your clients want to achieve – security, growth, protection, and aspirations – with everything you manage – planning, budgeting, investing, insurance, and credit. However, the evolution to “essential advisor” requires embracing the new paradigm as an opportunity to generate success and growth, rather than a threat to your existing status quo.
Becoming an Essential Advisor
The first step to becoming an essential advisor is understanding what investors want. As you’ll see below, there are several services that investors expect, but aren’t receiving.3 As an industry, we need to do a better job of meeting these expectations if we want to deliver financial wellness.
Of course, time is a limited resource. Offering additional services will require you to figure out how you can become more efficient and effective. This becomes easier with technology and automation. There are solutions out there that can help you – many of which are integrated into the Envestnet platform – but it’s up to you to decide which solutions make the most sense for your practice:
- Data and analytics – Data is the starting point for the financial planning process. With complete data, you can deliver actionable ideas right at the most optimal time for your clients. Envestnet | Yodlee’s APIs deliver data from over 20,000 global data sources, so you can easily get the bank, credit card, investment, loans, rewards, and financial account data you need to drive decision making.
- Insurance – Your clients want to feel protected. This relates to their income, taxes, and even estate planning. The Envestnet Insurance Exchange seamlessly connects select insurance carriers and established account processing vendors, allowing you to deliver cohesive and consistent holistic advice by incorporating insurance solutions into the wealth management process.
- Credit – As the chart above indicates, investors particularly feel like their advisors aren’t meeting their expectations when it comes to credit. The Envestnet Credit Exchange seamlessly enables you to incorporate lending solutions into the wealth management process.
- Budgeting and planning – Envestnet | MoneyGuide offers goals-based financial planning solutions to help investors achieve both their short- and long-term goals.
Staying aware of consumer expectations, and shifting to meet them, can significantly impact success – yours and your clients’. The essential advisor is aware of this and works to deliver a higher standard of advice that can ultimately maximize the growth of your practice.
Beyond technology, there are several things you can do to foster a practice that attracts both clients and top-tier talent:
- Lead by example – Your ability to lead is critical to success in today’s environment. Create and exemplify a culture and a mindset that people want to be a part of.
- Be more present – Multitasking decreases productivity and often leads to mistakes. Make small changes to increase your focus during key tasks and, more importantly, during personal interactions. Your clients and your employees will take notice.
- Showcase your value – Make it clear why your clients should do business with you! Develop a structured, genuine, and articulate mission statement and a set of guiding principles that you can share both externally and internally. Then, develop stories that bring those to life and that you can share with clients to reinforce your value and what makes you the best fit for their needs.
- Outline your offerings – Your potential and existing clients may make assumptions about what you can and can’t do – and may even seek out a new advisor based on those assumptions. Be clear about what you offer and what you don’t offer, and deliver both of those messages consistently and regularly.
We believe that there has never been a better time to be a financial advisor. The opportunity for you to grow your practice and better connect with your clients has never been greater. In becoming an essential advisor, and being aware of how you can evolve to meet your clients’ expectations, you can help deliver financial wellness better than the competition and find success now and in the future.
1. Val Srinivas and Urval Goradi, “The future of wealth in the United States,” Deloitte.com, last modified on November 9, 2015, https://www2.deloitte.com/insights/us/en/industry/investment-management/us-generational-wealth-trends.html.
2. David Robinson, “Here’s how to prepare your heirs for the $68 trillion ‘great wealth transfer,’” CNBC.com, last modified on February 25, 2019, https://www.cnbc.com/2019/02/22/how-to-prepare-your-heirs-for-the-68-trillion-great-wealth-transfer.html.
3. “Wealth Investor Series: Defining Wealth Management,” Spectrem.com, last modified August 2018, https://spectrem.com/Content_Product/-defining-wealth-management.aspx.