Rick Capozzi | 08/24/18
Next week J.P. Morgan will offer free trades with the launch of a new digital brokerage service. The move will hurt discount brokerage firms that already offer low-fee trading. Digital investing is just one of the many disruptive technologies impacting the way 300,000 advisors manage wealth. A certain percentage of the old investing model is being replaced by these new technologies. What’s next if executing a trade for a client is free and asset allocation, portfolio rebalancing, and basic planning can be handled by a robo-advisor for substantially less than 100 Basis points? How many years will it take before an organization announces it will manage assets for free? Who is at risk of substantial fee compression? Those advisors who are focused on investment management versus wealth management face the greatest risk of becoming obsolete in our increasingly digitized world.
“It is better to be a warrior in a garden than a gardener in a war.”
If you are a leader in the wealth management sector, there is only one response to tackle these looming threats: you must embrace a growth mindset in order to outcompete the competition. In doing so, you will be prepared for anything that is thrown at you. A well-known proverb in martial arts states: “Master, why do you teach me to fight, but speak of peace?” The master replies, “It is better to be a warrior in a garden than a gardener in a war.” If you believe that we are in a war to capture client assets and to retain those assets, then you will operate with a sense of purpose, urgency, and focus. But more importantly, you will evolve to meet the challenges of these new realities. You may be the peaceful warrior with a mental shield of armor, but you must also be ready for battle — ready to protect your business and grow. But how?
Robots will not take over the world if you focus on building deep and meaningful relationships with your clients.
You may need to reinvent yourself.
You may need to learn new skills, try a different model, and possibly even build a new team. Evaluate ways to drastically improve your value proposition, your client experience, and your service process. It means being all things to some people, obtaining larger clients, automating your processes, outsourcing certain tasks, and building a team of experts. Bottom line: investment management will be a smaller piece of the pie. Your business will be about creating holistic and customized solutions and being a “life advisor.” Robots will not take over the world if you focus on building deep and meaningful relationships with your clients. No robot in my lifetime will be able to look into a client’s eyes and know what they are feeling and have the right response.
Rick is currently president of Capozzi Advisory Group, LLC, a boutique consulting and training firm. He is quietly opening his playbook to bring real-world experience and deep industry knowledge by offering managers and advisors proven winning strategies and solutions to achieve sustainable growth. Check out his book, The Growth Mindset, now available on Amazon.