Where is the advice industry going and how do you position yourself?
Just before Christmas, I came across an interesting article titled the Future of Digital Advice. [1] The authors, with a working group, identified four potential scenarios five years out (i.e. the year 2021). To do so, they identified a couple of key variables, one being whether consumers would demand holistically integrated advice covering a range of financial disciplines and the other being the level of trust people have with fully digital channels. The four scenarios are set out here. As part of the exercise, the working group participants were asked to rate the relative likelihood of each future scenario. Here are the results …. As you can see in the diagram below, no one future was given an extremely high or low score, suggesting they are all equally plausible. Extrapolating further, one would conclude that robo advisers are unlikely to replace human financial advisers. However, this doesn’t mean today’s advisors can have a complacent attitude toward the digital revolution.
Source: The Future of Digital Financial Advice
In fact, the need to be able to explain why you are a financial advisor matters now probably more ever. My other Christmas reading was “Start With Why” by Simon Sinek. [2] The gist of his message is that people don’t buy WHAT you do, they buy WHY you do it. WHY is your reason for being and helps define your unique selling proposition. This realization is even clearer in the CRM2 world. I’m going to modify one of Simon’s quotations slightly: if an advisor does not have a clear sense of WHY, then it is impossible for prospective and existing clients to perceive anything more than WHAT the advisor does. At that point, I think you are just competing on price and performance.
Out of curiousity, I checked the WealthSimple website to see if had a clear sense of WHY. And they do. Their WHY is to make smart investing accessible to everyone. That’s pretty succinct.
So, how do you identify your WHY? Take some time to try the five why exercise, a technique originally developed by Sakichi Toyoda and was used within the Toyota Motor Corporation during the evolution of its manufacturing methodologies. By repeating why five times, the nature of the problem as well as its solution becomes clear.
This exercise is probably best done with another person as I think you will find the interaction productive. For those of you already working with a coach, feel free to enlist their assistance.
To get you started, here’s the first why: Why are you a financial advisor? I know the most typical first response will have something to do with the return on a client portfolio but that’s a WHAT, according to Mr. Sinek. As you go through the 2nd, 3rd and 4th iteration of this exercise, you will feel yourself moving away from results to your purpose. Good luck!
[1] Roeder, Jarrad and Acconciamessa, Matthew. 2016. “The Future of Digital Financial Advice.” Accessed 21 December 2016 http://www.heidrick.com/Knowledge-Center/Publication/future_digital_financial_advice
[2] Sinek, Simon. Start with Why: How Great Leaders Inspire Everyone to Take Action. New York: Portfolio, 2009. Print.
