What will financial advisors look like in the future? Maybe it’s the DMSV Model

by AM admin on July 19, 2017

By Michael Spellacy, Global Wealth Management Leader –

It opens with a sincere handshake, followed by a face-to-face conversation that’s punctuated by an easy, open dialogue, ending with a sense of mutual satisfaction and purpose. The client leaves, seemingly looking upwards towards the future with a renewed sense of purpose and relief, while the advisor returns to a large desk, ready to get to work and tackle tough problems.

What am I talking about? Wealth managers’ advertisements.

What’s striking? The sense of trust, authenticity, empathy, an understanding of the client’s goals and the feeling of “I hear you.”

What’s missing? Solutions, self-empowerment, automation and technology enabled, on-demand advice.

Why am I talking about this? That’s the $30 trillion dollar question.

As I mentioned in my earlier blog post, we’re on the verge of experiencing a once in a generation event—as 50% of all investible assets in the U.S. will be changing hands over a period of several years.  With the wealth flowing from Baby Boomers to Millennials and Generation X, it’s not only the assets that are changing—it’s perspective, it’s expectations and it’s a demand for technologically enabled solutions and dynamic advice that’s unique to digital natives.

For most us of digital immigrants, we’re just as comfortable with picking up the phone or heading to a meeting for our main interactions. For the digital natives, however, video conferencing and text messaging are far less intrusive than a one-on-one meeting.  And they’re seemingly far more personal.

Driving this point home, Cerulli estimates that 49% of millennials and 40% of Gen X, respectively, prefer to use self-directed platforms—while 69% of millennials and 47% of Gen X needs more financial advice.

Clearly, the nature of advice has to change as the upcoming wealth flow will bring a new set of expectations and demands. And, as wealth managers look to strike a balance between meeting the needs of their current clients and a new client base, what does the new advice paradigm look like?

It’s the DMSV model:

  • Digital: the art and science of advice v. control. Digital immigrants clearly want and need more investment advice, but are reluctant to hand over control to an advisor. As such, wealth managers should leverage a digital goals-based planning approach. These solutions / applications are interactive ways for a client to record their financial health and lifecycle goals on their own time, while working with a Financial Advisor (FA) in tandem with these specific milestones.
  • Mobile: the personal, always-on touch. Another way that large wealth managers can differentiate themselves is to make FAs accessible via mobile technology. By enabling advisors to send personalized text messages or interactive visuals when portfolio performance is particularly good—or when rebalancing is needed in real-time—the sense of trust shifts from the foundation to the front-and-center. Real-time touchpoints like video conferencing will help serve to reinforce a natural, authentic client experience.
  • Seamless: high-touch client service. To provide more flexibility for the advisor and more security to the clients, FAs should be part of a full service, seamless, on-point team, with a central point of contact that can “stand in” when required. This service could even be expanded so that a client has a team of financial advisors that they work with—giving another impression of “on-demand” service.
  • Virtual: engagement via social media. Financial Advisors should also embrace social media platforms and undergo the necessary training to harness the platforms and grow their book of business organically. A 2015 Putnam Investments Social Advisory Study for 800 financial advisors found that 79% of advisors acquired new business through social media platforms. LinkedIn, Facebook and Twitter, among others, are monetized on the back-end—why not engage from the front-end?

While we expect the FA of the future to have more of a digital presence, this can never completely replace the need for an in-person advisor—it’s simply a means to enable a FA to build and maintain trust with a new client base.

It’s meant to supplement authentic interactions, not replace them.

It’s as small as adding a tablet with real-time portfolio metrics in advertisements.

It’s getting back to the basics—with just a bit more.

What else can wealth managers do to get ahead of this shift?

I’d love to hear your thoughts.

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