Disrupt Or Die In A Post-COVID Wealth Management World

Cracks in the industry are widening, driving clients, assets and capital away from old channels into new types of advisory relationships. Don’t be Blockbuster. Be Netflix. We’re talking about how to embrace accelerating disruption next week.

It’s been an exhausting year, so financial professionals almost get a pass for not keeping their eyes on the numbers while trying to negotiate end-of-summer vacation time and see if the kids are actually going back to school.

But the numbers march on whether you’re paying attention or not. The post-COVID economy is emerging day by day. And if you aren’t actively working to engage with the new competitive landscape, you’ll get left behind.

We’re talking to winners in this year’s TAMP Summit. The messaging is all about growth at all levels of the industry, from solo advisor practices up to the trillion-dollar platforms that ruled the world before the pandemic shook the map.

You can get the agenda and reserve your seat HERE. The giants of technology-driven portfolio management will share their sense of where the industry is now and where we’re going. 

Envestnet, SEI, AssetMark, Orion, SmartX, Buckingham, Beaumont. They aren’t passive players. They work with trillions of dollars in assets and one way or another, each has a plan for capturing more from rivals. 

If they have anything to say about it, we’re going to see established giants fade from the post-COVID wealth management landscape. They smell blood in the water. And they welcome partners who can help them hunt.

After all, there’s theoretically enough wealth in the world to make every truly competitive firm happy trading expertise and relationships for a few basis points of fee flow. 

That’s the cooperative model that TAMPs embrace. Now it’s paying off.

Battle lines forming

The Fed is not floating all boats equally. Some advisors and asset managers are taking advantage of the disrupted environment to market themselves aggressively. Others remain in a defensive posture, hiding their heads while the storm passes.

Unfortunately for them, the storm is rearranging the map. Investors shocked by the vehemence of the COVID market dislocations no longer trust the old conventional wisdom. They need to be comforted and once again convinced.

And when something more sophisticated has been developed in the years since they last had to take a serious look at their assumptions, this is the kind of moment when they pivot. 

The triumph of vanilla broad-market index funds now puts conventional asset managers on the defensive. They won. Now, ironically enough, it’s downhill from here.

Looking at the asset flows this year, it’s clear that “business as usual” is no longer enough to hold market share or attract new accounts.

Yes, the S&P 500 has now finished its nightmare circle and is back at record levels, but BlackRock is still a harrowing $110 billion behind where it started the year.

That’s only a 1.4% divot given the company’s massive footprint, but it’s still a whole lot of real money that’s clearly in play. 

And it conceals a lot of rot behind the scenes. BlackRock AUM rebounded 13% in the recent quarter, which looks pretty good until you compare it to the S&P 500 surging 30% over the same period.

A lot of BlackRock clients didn’t sit through the entire round trip from record to record. They got off along the way. Firm after firm, fund complex after fund complex, the numbers are similar.

The market recovered 30% last quarter. Morgan Stanley, Raymond James, LPL, State Street, Invesco . . . rebuilt their assets 13-14% and effectively lost share of the overall market.

That’s the opportunity platforms that are still growing YTD are exploiting. You can grow in this environment. Envestnet, AssetMark and SEI have done it. 

New business models are the secret. Even conventional AUM relationships are under pressure as technology lets people who know the market deliver their expertise in new ways.

When you have access to the best expertise on the planet and minimal fee drag along the way, you can concentrate on making your clients happy and communicating coherent value to prospects.

Mutual funds liberated the world from the challenge of populating every portfolio by hand. Then exchange-traded products opened the doors to new asset classes and more efficient structures.

Every stage opened doors to people who found a specialized spot in the process where they could excel. Some of us became pure relationship managers, others focused on asset allocation, tax efficiency and other financial flourishes in pursuit of enhanced outcomes.

That’s the industry that crystallized in the wake of the 2008 crash. Now money is moving again. 

If you want to stay in the old world, that’s okay. For many of us, retirement is just over the horizon.

But if you’re still ambitious and would rather make something strong and lasting before you go, it’s worth clearing your head of preconceptions and looking toward the future instead.

You want to be a disruptor. We’ve all suffered our share of disruption in the last six months. Those who learn the lessons of history and innovate into the future can do great things.

We're talking about that future next week. Reserve your seat HERE.


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