Revolutionizing Advice

Creating Advisor 2.0 won’t be easy, but some National Financial clients have shown that it can be done successfully. Based on our experience working with hundreds of broker-dealers, Advisor 2.0 hinges on five key areas:

1. Being laser-focused on your strategy. No firm can be all things to all investors, and the most successful are those that have clearly defined their strategy and aligned their business to achieve it. We are seeing four potential strategies emerge:

• Focused players who strive to do certain things very well, for example, helping CPAs enter the brokerage industry.
• New model creators who combine various models into one, such as an “independent wirehouse” where advisors have the independence to give clients fiduciary advice, but are relieved from running a back office because of a centralized infrastructure.
• Adjacent business acquirers who have grown by adding complementary businesses, such as a bank broker-dealer acquiring a corporate trust and mutual fund business.
• Scale acquirers who have grown their footprint and gained efficiencies by combining similar businesses.

2. Putting the investor at the epicenter. Winning demands a deep understanding of the end investor and a business model designed to meet his or her needs. The industry has been focused primarily on helping boomers accumulate. Now we should help them navigate the switch to retirement, and also deal with a markedly different generation, with distinct risk tolerances and technology needs.

3. Transforming your advisors. The next generation of investors will consume advice differently from their parents. BDs who can reorient their advisors’ focus to support the new model may benefit the most from this shift.

4. Cracking the product code. Broker-dealers should review their product offering and consider offering more simplified products that have the potential to cut through today’s marketplace proliferation while addressing risk for skittish investors.

5. Driving operational excellence. To enable advisors to provide scalable advice, broker-dealers must increase the efficiency of their infrastructures. Better use of technology to connect investors, advisors and the middle office is the next frontier for efficiency.

Advisor 2.0 should continue to help younger boomers with their retirement savings, but should also help older boomers navigate the switch to decumulation. At the same time, it should help members of Gen X and Y increase their wealth accumulation, though in a wholly different way from their parents.