Online advisory services the so-called robo-advisors are disrupting how financial advice is delivered. They will force our industry to evolve, which may be good or bad, depending on how you react. Yet advisory firms that remain nimble will have an opportunity to thrive.
Here are a few ideas to begin with.
Rethink fees: If you are a typical advisor, the majority of your compensation is tied to investment management. Yet unless you are a stellar active money manager who beats a passive portfolio net of fees consistently, you will no longer be able to charge your current fees.
Those revenues dont have to disappear, though. Maintain them by charging more for other types of advice and perks you provide clients. Shift your fee structure so it is transparent and accentuates the value and importance of the guidance you provide. And redesign your service offering so the guidance portion stands out; a series of 30- to 60-minute quarterly performance review meetings wont provide enough value.
Revise your messaging: Effective marketing focuses on concerns or decisions your prospects face and explains how your process addresses them. Stop talking about yourself and focus on the problems you can solve for prospects.
Explain what they should be looking for, how they will know they have received quality advice and what makes your service unique. Discuss why they should do business with a professional advisory firm that has many years of experience, is federally regulated, has both a service team and a transparent fee structure in place, and specializes in providing advice to clients with profiles similar to theirs.
Upgrade your technology: Online rivals will shine a light on your technology offerings. Your business needs to be nimble, paperless, managed in the cloud and accessible from wherever you are working.
Online portals are a great example: A good portal provides both you and your clients a way to view and track the performance of all the clients accounts, at any time. A good portal can also connect and track your clients debt, bank, credit card accounts and more.
One of our clients, for instance, is an executive at a large retailer. She gets regular bonuses and incentive stock. Earlier this year, our portal alerted us that $600,000 from the sale of vested shares had showed up in her company-related brokerage account. We contacted the client to discuss how to incorporate the new cash infusion into her financial plan; she subsequently added these funds to an account we manage.
Our clients live busy lives and rely on us to save them time and provide them with the appropriate recommendations, based on what we already know about them. An algorithm just cant compete.
Deborah Fox is CEO of Fox Financial Planning Network in San Diego. Follow her on Twitter at
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