Reader Alert: This is the third in a series of 10 articles for Advisor.Ca’s 10th anniversary exploring trends that will change the way advisors do business in the coming 10 years.
Have you watched a high-school student do homework lately?
Try it some time. And then step back and think about what their behaviours will mean to the future of your business.
The average 17-year-old in North America engages in a level of multitasking that borders on A.D.D. They barely crack a book, and instead rely on online research tools and homework completion programs that reside on their schools’ web pages.
While they’re toiling with grammar and math, they’ve got Facebook open, as well as an instant messaging program, internet-based voice chat, and YouTube – which for all intents and purposes has replaced the radio for teens who want to whistle while they work.
And, somehow in this multi-connected morass, the kids are actually getting the homework done. Levels of distractions that would drive most adults insane are considered normal. These kids, with attention spans functioning in micro-bursts, jump seamlessly from task to task, and then back again until they sign off for the night.
All this important, because 10 years from now these kids are going to be your clients.
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For some clients in 2020, face-to-face interactions will be passé. An increasingly younger client base will push more transactions online, and presentation of product specifics will have to come in short-take formats that cater to their shortened attention spans.
Older clients, and those with complex income and tax pictures, may come in for office consultations, but they’ll be the exception. “The ability to service a client doesn’t have to mean everyone is sitting together anymore,” points out Scott Sinclair, Chief Operating Officer, AEGON Canada/Transamerica Life. “The boundaries are breaking down.”
From a productivity standpoint, that’s great news for advisors. Those with farmer clients in Northern Saskatechewan won’t have to drive 200 kilometers in order to provide completely personalized advice. But the changes won’t be without downsides.
“You lose things in a non face-to-face conversation,” notes Byren Innes, senior vice president and director of NewLink Group. “You can have a conference call and get the stuff done but you’re not getting the body language, or nuances, or people rolling their eyes. Things like that get lost and that’s the challenge for advisors: How do you engage clients in a detached world?”
One way, certainly, will be through use of illustration tools that blow away anything currently available. “Sales presentations and analysis tools will be on steroids compared to where they are today,” Innes says. “They’ll be interactive and used to make a product recommendation instantaneously.”
Distributors, meanwhile, will be able to punch up their value by offering tools that let advisors demonstrate product features and provide apples-to-apples comparisons in ways clients can easily digest.
And, adds Timothy Welsh, president of Nexus Strategy, a Larkspur, California-based consulting firm, these tools will be the ultimate recruiter of new advisors. By offering less time with paperwork, more time with clients, and faster payment, they’ll have everything they need to lure top talent.
“When that picks up, you’ll see an arms race over who can get the coolest device to free up the advisor to do what they do best and help investors,” he says, “Blackberry, iPhone, whatever.”
The problem, notes Innes, is that such robust tools may leave little room for advice.
“Decisions will be made, and unmade, in real time. And if the tools are that strong where does advice fit in? How do you give it, and when? And what is the value of advice?” he asks. “I hope that’s not what the outcome is, but that is a risk.”
Emerging web shopping patterns already suggest clients will be much better researched prior to moving to transactions, which means advisors need to take the educational experience to the next level in order to keep the client’s attention.
“The ability of the consumer to-pre educate is massive,” says Innes. “I can go on YouTube and see someone do a presentation on universal life, or ETFs, or whatever. So I’m no longer disadvantaged in front of a salesperson.”
And, while the consumer may not buy online, the ability to research changes the game, because clients know what the products are, and have a good idea about investment cost structures, prior to walking in the door.
On balance, says Sinclair, coming changes will create a more client-centric business model and place an emphasis on planning and advice. That’s a positive in a world the client’s knowledge base is on the rise, and Gen Y-ers are known for liking attention.
“It’s a virtualized world, still based in advice, but not based on face-to-face interaction – unless that’s what the client wants,” notes Sinclair. “But it’s more time- and cost-effective for everyone not to have to book a series of hour-long meetings, and then a follow up, and a follow up on the follow up.”
To get a sense for how much more virtualized the world will become, Innes says people only need look at the recent impact of social media. Three years ago, nobody had heard of it, yet it’s massively changed the way people do business.
It’s used by clients to get peer recommendations and largely redefined the meaning of the word “friend” in the eyes of Gen-Y consumers. And, in the doing, it’s given them access to hundreds of opinions from pundits worldwide. It’s a major wrinkle for advisors dealing with a group that all statistics indicate place a higher emphasis on peer recommendations than their predecessors.
“In the recent past, the advisor was king because he or she had the knowledge and the skills and access to information that the consumer didn’t,” says Innes. “That’s no longer true. The consumer can now get a myriad of information, as well of opinions – some of which are not very good but they’re opinions nonetheless.”