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The financial services industry is rapidly changing. Competitive and regulatory forces, combined with shifts in clients’ attitudes and expectations, have radically altered the business landscape for advisors. To navigate this new terrain, you need to be aware of the challenges – and the opportunities.

What’s driving the changes?

The key factors behind the new business environment for advisors include the following:

None of these developments should come as a surprise to you – in fact, advisors frequently cite at our workshops that these factors are leading many of them to adopt new technologies and move assets from a commission platform to fee-based/asset-priced models.

Many of these changes are having dramatic impacts on our industry, but they are not to fear, but rather something to embrace. Here are several ways to do just that:

Recognize the opportunities. The financial services industry will only continue to grow. With new products and services being offered every day, your opportunity to expand your offering to your clients and prospects grows as well. Given the sheer number of people who want, and need, financial advice your future has never been brighter.

Consider these numbers:

  • 62% of Americans do not have a financial advisor. Of those who do, 44% believe their advisor doesn’t understand their complete financial picture.1
  • In 2016, U.S. households held $34 trillion in investable assets – but in 2030, this figure will rise to $67 trillion. And by 2030, some $150 - $240 billion in wealth management fees will be “up for grabs.”2

Expand your target market. For many in our industry, the most “profitable” clients have been the wealthiest ones. But it is a mistake to ignore the “mass-affluent” market. This group, whose members maintain accounts between $100,000 and $1 million, have approximately $11.1 trillion in investable assets, which represents 35% of the entire financial services marketplace. And the lower end of the mass-affluent group (accounts under $250,000) has $2.6 trillion in market value. As advisors have pursued the high-end clients, the mass-affluent market may well be under-served – which means they are in need of services. 

Focus on planning, not products. To thrive in the coming years, you may need to consider your clients’ “big picture” more than ever before. When an advisor engages in wealth planning with a client, it deepens the relationship, increases overall client satisfaction, improves client retention and increases share of wallet. Think about redefining yourself as an advice provider who can help clients prioritize their goals and choose the right solutions to meet those goals.

Take full advantage of technology. Our industry has made some big strides in technology the past few years, making it easier than ever for you to engage clients more deeply, offer a wider array of solutions, and provide advice and guidance through goals-based planning approach.

RBC Correspondent and Advisor Services offers sophisticated technology and tools, including our award-winning advisor platform, RBC BLACK, which bundles together on one platform and integrates five wealth technology solutions.

Ultimately, technology can play a huge role in helping you provide much-needed advice to your clients – the ones you have today and the ones you’ll add tomorrow.

Be ready, willing and able to change. To compete in an increasingly competitive market, you will need to adjust your business model. This means, among other actions, you may have to do the following:

  • Be prepared for price transparency, and explicit price competition.
  • Develop new services and programs, like planning-based advice, to pre-empt investor switching.
  • Meet the digital requirements for the different investor segments.
  • Create service models that combine digital and human options.

How should you respond to change? By embracing it. There’s no doubt about it: The role of the advisor is changing. A confluence of external and internal forces – competitive, regulatory, attitudinal and technological – is moving advisors from perceived “low-value” activities, such as investment selection, to “high-value” endeavors, particularly personalized, planning-oriented advice.

Concurrent with these forces is a huge increase in investable assets over the next several years.

Taken together, these factors point to a need for the type of advice and service you can offer. And RBC Correspondent and Advisor Services can provide you with the support and resources you need to succeed in the new world of financial services.

  1. Northwestern Mutual Planning and Progress Study 2016
  2. WealthManagement.com February 2017 – The Index