Being an advisor in 2030

This is the last issue of Advisor’s Edge this decade. You won’t hear from us again until 2020, when, presumably, moon tourism has gone mainstream and replicants have cornered the financial planning market.

This is a time when many take stock of the decade that’s ending. I haven’t been covering this industry long enough to offer a history lesson, though. While some readers will say I’m no better equipped than a dart-throwing chimp to make predictions about the next decade of wealth management, I’ll attempt it anyway.

Playing nice with chatbots

The robos came and didn’t conquer, but they’ve permanently changed expectations. Over the next decade, clients will demand more convenient, user-friendly ways to interact with you and their accounts. Apps, digital assistants and voice assistants will become standard. Much has been made about digital natives preferring to interact through their devices, but EY’s 2019 wealth management report found that demand for these technologies is consistent across generations and actually increases with the level of investable assets. The report recommends investing in voice-enabled tools now. Firms still tinkering with clunky websites have a problem.

A recent industry mantra is that digital advice complements, rather than replaces, human contact. That will continue, EY says. The voice assistant’s staid yet uncanny tone won’t compete with your human comfort in a downturn, but it will eliminate mundane tasks and free up time for meaningful client contact. Signing forms, reviewing accounts and recommending products will happen remotely. Start imagining how you’ll use that extra time to add value.

Customization is everywhere

BlackRock is using satellites to monitor inventory in Chinese steelyards. Thasos Group used data on the number of cellphones near Tesla’s plant to verify the company was operating round-the-clock shifts before estimating production. Where analysts may previously have staked out a parking lot to gauge store traffic, they can now buy satellite images of all the parking lots. This is good news for those with large data budgets. It’s a problem for advisors picking stocks by poring over quarterly reports.

While custom data is used for investment decisions, offering custom fee options will also be an advantage. It may take another decade, but the regulatory needle will continue to move toward unbundling product fees and advice. In addition to fixed and hourly and fee models, the next 10 years will see more subscription-based models for advisory services. Firms with platforms that permit these options will come out ahead.

Customization will extend to products, too. Costs have come down for alternative investments and direct indexing, which allows clients to buy an index but remove certain securities. A KPMG report talks of “platformication,” where firms — or big tech companies — operate platforms through which clients choose products from multiple providers. A product shelf may look more like the iTunes store. “With empowered and intelligent customers able to make choices quickly and easily, firms unable to deliver a frictionless and bespoke proposition will become irrelevant,” the report says.

Data collected from wearables, and medical advances to predict lifespan, will lead to more accurate risk-based insurance pricing. Troves of transaction history will be used to determine client preferences and to tailor products accordingly, with clients coming to expect personalized solutions.

Putting money on values

Demographics suggest the surging interest in sustainable products is not a fad. Various surveys show that women, high-net-worth investors and younger people — all of whose share of wealth is set to increase in the coming decade — are most interested in the products.

Younger generations have already demonstrated that they will support brands that reflect their values and punish those that don’t. They’ve also shown ambivalence to traditional politics, with lower voter turnout and decreased party membership, and higher engagement through alternative means such as protesting and signing petitions. As these future clients earn enough to invest, it’s only natural that they’ll see it as another opportunity to express their values.

There’s also the investing rationale. Climate change poses two types of risks to investors: the costs of transitioning to a low-carbon economy, and the physical impact from extreme weather. At least one of these will become more acute in the next decade, affecting unprotected portfolios.

Those are my themes to carry into the next year and beyond (or to ignore, or throw darts at). I’ll find conflicted comfort in the likelihood that, when I would be held to account a decade from now, a robot crafting more accurate forecasts will have long since replaced me.

Mark Burgess is managing editor of Advisor’s Edge. Email him at mark.burgess@tc.tc.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.