By 2025 the financial advisory business will look quite different than it is today.
There will be relatively few financial advisor practices, but they will be extremely successful.
They will be incredibly more profitable than many of the best managed financial advisory practices are today.
A number of powerful factors are working in favor of the financial advisory industry such as the aging of the baby boomer generation and the explosive growth in private wealth worldwide.
Moreover, the number of rich and super-rich who will rely on professionals such as financial advisors is going to likely accelerate.
However, some countervailing forces, such as the fact that AI – for certain cohorts – will replace or severely mitigate the value of flesh and blood financial advisors. In many ways financial advisors will be – at most – the non-mechanical interface between clients and technology.
The financial advisory firms that will excel will be the ones that are able to connect with high-value clients such as the ultra-wealthy and deliver customized solutions, not products or services.
They will be the experts the wealthy want.
According to John Bowen, founder of CEG Advantage and author of Elite Wealth Planning: Lessons from the Super Rich, “Technical capabilities, which were once a way for financial advisors to differentiate themselves, will in the near future be totally commoditized. Today the top 10 to 15% of the financial advisor community can all provide comparative products and services. In less than a decade almost every financial advisor will be on the same technical footing. However, real success will only go to those financial advisors who understand and skillfully address the human element.”
The human element is the personal and emotional component of elite wealth management. It includes everything and everyone that is important to the clients, as well as everything and everyone that can be affected by the client’s decisions.
Systematic processes, such as the Whole Client Model, prove to be effective in placing the human element center-stage.
Even though the financial advisory business is fragmented and will likely remain so, by 2025 it will dramatically bifurcate where a small percentage of financial advisors who are adept when it comes to the human element will generate tremendous revenues, and the rest will be increasingly holding on by their nails.