Serving the Empowered Mass Affluent

That era is over.

This ‘democratization’ of investing has created a new mindset for clients, who now have increased interest in being more involved in financial decisions with their advisor. It makes the personal relationship between client and advisor paramount once again. Fortunately, I have never forgotten the lessons learned when I started in this business 37 years ago. While working for an insurance business, I understood that I could never deliver the level of service and advice that clients needed over the phone.

It required a personal meeting. They needed to see me to gain trust. It wasn’t just about the product - it was about the personal experience of the client. Think about Starbucks for a moment. They have established a great product that is “all about the bean.” That special coffee bean makes their coffee distinctive. But if you ask why so many have made Starbucks part of their daily life, it is because the brand is forever tied to the ‘experience.’ The delivery of the product is done personally in an Italian Espresso Bar setting that has become that “third place” between home and the workplace.

The need for advice delivered personally has never been stronger than it is today.

Unfortunately, much of the investment community is paralyzed by indecision and fear of change. An over-reliance on mathematical formulas and flawed investment models has forced many clients to look for new paths to wealth creation. The winners going forward will be those who can successfully answer their clients’ question, “Am I going to be alright?”

Will they come from the Morgan Stanley and Goldman Sachs model - investment bankers protecting their own bottom lines through acquisition? Or will it be the independent advisors who have aligned themselves with low cost providers (Charles Schwab, Ameritrade) committed to the idea that for clients, ‘if you do better, we do better.’

The client-advisor relationship has shifted from emphasizing price to delivering real value. That is why we are seeing a second revolution in our industry with financial planning as its catalyst. Driven by the mass affluent, defined as those having liquid assets between $100,000 and $10 Million, financial planning has taken on the same sort of democratization we saw with investing.

Delivering affordable, transparent advice personally will drive our industry going forward. Having great technology is just the beginning of today’s relationship. Having a repeatable planning process can allow for more clients to take advantage of high-level service for less expense than ever before. With clients more involved in the process, they are empowered to work with their advisor to create their most personalized plan with the best value.

This new era of client-advisor relationships will rely on the ability of advisor firms to provide the highest level of financial planning to more clients without compromising the individual attention each client is seeking and deserves.

Embracing today’s technology allows us to meet with clients regularly, whether in person or through video conferencing. The latter appeals to the busy mass affluent client, especially its fastest growing segment, millennials. For independent firms like ours, it isn’t good enough to be their best advisor option locally, we need to be their best advisor option anywhere.

Thanks for reading.

Dave