In the future, will business as usual lead to a failing business?

No one knows what the future holds. However, the seeds of future possibilities are being sown now. For example, are you surprised when someone contributing nothing to their retirement fund now has nothing saved later?

Locally and globally, patterns and trajectories are in motion. By noticing these, you can spot opportunities to create a long-lasting business. Here are what industry experts and other advisors are seeing in the financial services world.

Changing demographics

About 50 percent of all financial advisors are older than 55 in the United States, according to Cerulli Associates. Unless more people start entering the financial services profession, this may mean fewer advisors overall as current advisor retire. Potentially, then, prospective clients will struggle to find advisors, and existing clients may scramble to find new ones as theirs retire. In the industry, this could trigger consolidation through mergers and acquisitions and succession planning, which may be another area of opportunity.

Overall, countries worldwide are facing aging populations. It’s estimated that by the year 2030, 1 billion people worldwide will be age 65 or older. When that happens, for the first time in history, the number of people older than 50 will outnumber those younger than 17.

As it is, the true number of households being served by holistic financial planning is underserved. An estimated only 15 percent of all U.S. households have true financial planning advice. As more financial planners move to the fee-based model of financial planning, it may be even more challenging to assist those already underserved markets.

Difficulty serving middle-income clients

Some advisors in the United Kingdom, where commissions have been banned since 2013, have found that the middle market may be unwilling or unable to pay fees for financial planning. So while advisors may want to serve that market, it may not bring in enough income to allow them to stay in business — unless they change the way their business is structured.

“Advice just costs more when it’s fee-based rather than commission-based,” said five-year MDRT member Tristan Hartey, of Oswestry, England. “It’s not cost-effective for us to take on a lower-value client. By the time we’ve done the reports, actually looked after them and paid our compliance fees it, they’re costing us money.”

Efficiencies through technology

To serve that middle market, Hartey has seen online financial services, a form of robo-advice, happening in the U.K. market. Through this, financial advisors may be able to achieve the cost-effectiveness and scale needed to serve middle-income clients.

For example, new clients of four-year MDRT member Jonathan Peter Kestle, CLU, B. Comm, receive a “digital concierge” service, which increases his client onboarding efficiency. The digital concierge provides new clients with a detailed questionnaire to fill out as well as compliance forms and disclosures. Kestle, of Ingersoll, Ontario, Canada, also uses custom-built, algorithm-driven software to find large retirement and investment fund tax savings for clients. (Read more in the March/April issue of Round the Table.)

It’s not that technology that will replace financial advisors, “it’s the advisors using technology who will replace advisors not using technology,” Kestle said. 

Technology and advisors using a type of robo-advice, especially for smaller term life insurance policies, may be a way to help serve that market. For example, 11-year MDRT member Ryan J. Pinney, of Roseville, California, sells several thousand policies a month online without seeing clients.

Another way to stay competitive is fiercely protecting your time with highly honed processes, which is how 16-year MDRT member Guy Munro Mankey, of North Sydney, New South Wales, Australia, stays successful. In Australia, commissions are banned and compliance paperwork is extensive, even for small policies. To make the best use of his time, he uses tools such as the free app AutoHotkey, which assigns entire emails or other text a six-letter code. Use the code and the already-written text appears.

As practices change, effective office processes will include targeted technology like automated forms and applications and perhaps robo-advice for middle-market clients.

More service and income with fewer clients

In a financial services world where more compliance and education are required, another option is to simply have fewer clients. If you provide holistic financial planning for fewer clients — focusing on those who are high-net-worth and pay fees — you can significantly increase your income, said Bill Bachrach, author and coach to financial advisors. Although, this would leave the middle market underserved.

Ultimately, though, technology and office processes are tools to enhance your business strategy. They’re not magic pills. A saw without a skilled craftsman wielding it won’t construct houses.

• Read how financial advisors are using technology as well as results from an MDRT survey about technology.
• Read “Gaining a competitive advantage” about how one MDRT member uses technology to save some of his clients thousands of dollars and his staff time.
• Watch more from Tristan Hartey in “Easy ideas to keep clients happy”  and “Learn a strategy for showing value and attracting clients.”
• Read efficiency tips from Guy Monro Mankey.
• Bill Bachrach details how you can “Make more money with fewer clients”  and he talks about mindsets for success at “Scarcity or abundance mentality.”
• Read “Predicting the future of regulations.”
• Read “How to create a prosperous future,” which discusses how Wu Shuk Ping Joyce, of Hong Kong, who has changed her career focus because of the changes she observed in the financial planning world.
• Watch “Leveraging technology” to hear how Ryan Pinney finds clients online and learn more about his processes.