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Practice Management

Advances in technology and better informed clients are forcing firms to adapt their strategies to a changed business environment.

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).
 

Advisors' roles at a basic level―particularly how they interact with clients―will be radically transformed in the coming decade, according to a new report by the Boston Consulting Group.

"RIAs in the U.S. will be directly impacted," says Bruce Holley, a senior partner and managing director at the firm. "The economics are unavoidable and the value proposition is critical."

Currently, many relationship managers spend a lot of time on administrative tasks, focusing mostly on existing clients and working primarily during office hours. What's more, they are typically hired from a competitor and have experience but little formal training.

Two factors are going to upend the status quo, according to the report: advances in technology and better informed, more sophisticated clients.

Need for 'More Formal Education'
Machines are expected to help advisors make better investment decisions for clients and continue to liberate them from administrative work.

And as clients become more sophisticated and more tech savvy, "they will expect relationship managers to match their 24/7 online lifestyle and embrace their geographic mobility and faster-paced cycles of building and selling enterprises and altering family structures," the report states.

Regulators are likely to begin requiring advisors to "to possess more formal financial education," while new certification programs for the job are likely to be developed, the report predicts.

Wealth management firms need to set up training programs, if they haven't already, and hire new advisors directly from universities and other client-service oriented industries, the report recommends.

Technology and interactive devices will not only allow advisors to have more frequent contact, but also closer working relationships with clients, according to Holley.

New Advisor Archetypes
Consequently, Boston Consulting Group sees the emergence of three relationship manager archetypes:

The Orchestrator: This advisor will cater to select high-net-worth and ultrahigh-net-worth clients who are "demanding and performance focused," the report says.

The advisor's role will be that of a "trusted primary point of contact and fierce custodian of the clients' sensitive data. Rather than try to be an expert in every field, the orchestrator will select specialists who are best suited to meet each client's specific goals."

The Enabler: Boston Consulting envisions this type of wealth manager serving a large number of "sophisticated, self-directed clients at all wealth levels."

Although self-sufficient, their clients will demand access to analytical tools, fast execution of transactions, and technical support for digital infrastructure.

The Guardian: This wealth manager will service wealthy clients who are uncomfortable with financial markets, uninterested in the latest digital tools, and would rather concentrate on personal interests than investments.

Clients in this segment "are looking for a trusted person to guide them and the process as pleasant as possible," the report says.

-by Charles Paikert
Charles Paikert is a senior editor at Financial Planning. Follow him on Twitter at @paikert.

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