Personal investing

A new wave of financial advice

As the world moves into the next phase of technological disruption, independent financial advisers will have to rethink their current offering, focusing on the human element in order to add indispensable value to their clients’ lives. Carl Lategan shares some learnings from the recent Allan Gray Investment Conference.

Over the last few years, conversations around the “fourth industrial revolution” have dominated boardrooms, conference venues, lecture halls and political chambers around the world. Robotics, the Internet of Things, virtual reality and artificial intelligence are disrupting traditional businesses and forcing industry leaders to revaluate the role their professions will play in the changing landscape.

The second wave of disruption

While legislators and other leaders prepare for the fourth industrial revolution, trend analyst Dion Chang believes it is already well underway and prefers to call this era the second wave of disruption. Chang highlights the impact that the first wave of disruptive technologies, like the internet and smartphones, have had on most industries. Over the last two decades, large companies who have taken too long to adjust to their clients’ changing needs have lost market share, and many who failed to pivot in time have become obsolete.

In many sectors, the most palpable changes can be seen along traditional value chains, as technology replaces certain players and processes. The financial services sector is no exception: From making it easy to become your own stockbroker, to robo-advice and the ability to invest in your favourite brands via social media applications, Fintech is evolving rapidly.

While as an independent financial adviser (IFA) it may be hard not to perceive this evolution as a threat, when reframed cleverly, you could see it as a strategic opportunity. Rather than worrying about artificial intelligence nibbling at your lunch, you could start to investigate how you can leverage technology to streamline your processes and work to your advantage. This will allow you to free up valuable time for deepening your relationships with your clients to coach them through the ebbs and flows of their financial lives. Technology cannot replace the emotional touch. 

Future-proofing requires a solid foundation

Of course, all this takes time, and in an advisory world plagued by regulatory change and administrative burdens, it can be difficult to create the space to work on your business. But this is key to future growth.

While new and established businesses face different challenges, building – and maintaining – a solid foundation is key. Recognising how tough it can be to get the basics right, the Association of Savings and Investment South Africa (ASISA) has launched a programme to provide skills development to up-and-coming black-owned advisory practices, which Rob Macdonald showcased at the Investment Conference.

In an evolving environment, even as an established business, you may wish to revisit these fundamental elements – that are unlikely to change anytime soon – to help you adapt to the impact of technological disruption and thrive in the future.

10 things to focus on

  1. Offer clients a distinct value proposition: How are you enhancing their lives?
  2. Managing clients effectively: Are you spending your time and effort where it counts?
  3. Provide a compelling service offering.
  4. Build a brand that is authentic and resonates with your clients.
  5. Make use of marketing channels that work for your practice.
  6. Systemise: Implement methodical systems to improve your workflow.
  7. Put technology at the core of your practice: Don’t be left behind as new technologies change the way things are done.
  8. Get the right people on board: Your team should embody your vision and values.
  9. Manage governance carefully. As we move into this next wave, data and privacy protection will become a pressure point.
  10. Focus on culture: in your business and with your clients.

Giving advice in a changing world

Remember the financial industry isn’t changing in isolation. All aspects of society are rapidly evolving too, and this may be unsettling for your clients. Many jobs that are common today may no longer exist in the future, and new jobs we haven’t conceptualised will need to be filled.

Chang projects that the second wave of disruption will result in more workers joining the gig economy as they build what he calls a “career portfolio”. Professionals will change career paths multiple times during their lifetimes, taking sabbaticals to explore new options, consistently looking for opportunities to upskill and dip in and out of mini retirements. This will pose new challenges for financial planning and make your role more complex.

With fewer tried and tested precedents, your current and future clients will need you to be their strategic partner, helping them weather the changing world and guiding their behaviour as they aspire to build long-term wealth.

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