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Look Beyond the Advisor News and Noise to Harness the Headlines

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Industry news headlines seize our attention. Week to week, we hear and read about crises and catastrophes that are about to rock your world either now or very, very soon. Can these headlines be both compelling—and irrelevant?  

Of course they can. Just as you counsel clients not to focus on every screaming stock market headline, you need to “step back from the ledge” about industry news. 

Consider these recent headlines and quotes from industry publications. They are all real.

  • Robo Advisors – On-line advice a growing threat
  • Is your custodian secretly courting your clients for a direct relationship that doesn’t include you?
  • DC execs see big changes from Administrations’ push for DOL Fiduciary Standard
  • Obama picks fight with Wall Street Banks
  • Asset based pricing experiencing rapid margin compression
  • “If you have less than $100 Million AUM- you’ll likely have three options: change your business model drastically, join a billion-dollar firm or quit (perhaps retire)”
  • “The vast majority of advisory firms have no economic value.” 

If you were to read all these headlines or quotes in a single day and consider only the worst-case scenarios, the effect on your mood would probably be good for the local tavern owner, but nobody else. And once you’d settled your nerves, so to speak, you might be tempted to initiate changes to your business that might not be in your best interest. 

So What’s Really Relevant?

To be sure, all of these headlines and quotes have some basis in fact. But they also feature a heavy dose of opinion, which makes for more interesting headlines. 

For a few firms, the issues in the headlines above represent a clear and present danger to the health of their businesses, and finding the nearest exit might be the best option. For the vast majority of successful firms, though, the news is mostly irrelevant. So how do you know if you are among the few or the majority?  

Let’s start with two steps for interpreting the news:

1) Put news in the appropriate context.

2) Harness the headlines to your advantage. 

First, let’s put the news in context. Eye-catching headlines tend to fit into three primary categories: 

  • Consumer preference
  • Competitor behavior/threats
  • Compliance/regulatory changes.

Now let’s put them in context, one by one. 

Consumer Preferences

Before you step onto the ledge, ask yourself: Is this news even marginally based on actual, documented changes in consumer preferences, or is it a thinly-reported “trend” story based on a few anecdotes?  

Here’s what we know. The substantial trust gap consumers feel about corporations in general, and with financial services companies in particular, has been well documented by Harris Reputation Quotient polls (which are highly reliable) in recent years. The consumer self-serve movement is due, in part, to the lack of trust in the financial services industry. All this is fact. Nevertheless, the question remains, does it directly affect your business?  

In line with the Harris findings on corporate behavior and reputation, other research has shown that a majority of investors expect financial professionals off­ering fee-based advice to act in their best interests in all aspects of the financial relationship, and would not work with an advisor who did not do so.

What does this mean? Consumers are beginning to expect a fiduciary standard, even if they are not familiar with the terminology.

Then if an advisor is operating under a different standard of care, is their business is doomed?  Likely not. But clients will expect a certain quality of service nonetheless, and an increasing percentage of clients and prospects may consider the standard of care when they evaluate the services you offer.

Conclusion:  In this context, it makes sense to evaluate your service model to determine how closely it matches evolving expectations. 

Competitive Threats

Are industry changes a threat to your business – or an opportunity to enhance it? 

The media is full of articles on the robo-advisor threat, the movement away from asset-based pricing and the latest competitors who are lowering fees and squeezing your margins as a result. But what do these things mean to you, really? Yes, there is margin compression—but does it bear on your segment of the market? Do you believe the theory that these trends will cause most independent firms to merge or die?  Do you have options?    

If you are an advisor, you do have options. Many advisors have made changes in their vendor relationships and/or eliminated at least one intermediary. Some have considered moving to an advisor-as-portfolio-manager model to eliminate outside manager fees. Others have added value to their clients by providing additional services. Simply incorporating new technology can enhance the personal interaction you bring to your clients.  

Conclusion: Don’t rush to change a successful model just because some folks are predicting gloom. Study the data – and avoid extremes. 

Caveat: If you are a service provider to advisors, however, you may want to consider restructuring your fees, or exploring how you can capitalize on economies of scale. You can also assess what new or improved technology and services can benefit those you serve and add to your value in their eyes.


Are regulatory changes an added aggravation – or an added opportunity for you to demonstrate to clients that you are providing the highest standard of service? 

DOL changes . . . varying ideas on the fiduciary standard . . . red-flag product categories . . . qualified investors . . . The regulatory dilemmas are countless – and need to be put in perspective.

Regardless of how you feel about regulatory proposals and changes, they can serve as an impetus for you to reflect on your current service offering and how you might improve it. Even if cumbersome and imperfect, and more than a little bit upsetting, behind-the-scenes forces can provide the incentive for innovation for those who are willing to think outside the proverbial nine dots. How transparent are you? How have you educated your clients on industry changes and concerns? 

Conclusion: Rather than fighting the regulatory wave, figure out how to ride it. 

Harness the Headlines

Time for step two. Reading industry media articles is essential, since we all need to be aware of changing consumer patterns, competitors, disruptors and regulatory changes. Current financial services business models have evolved over decades; they are not going to go out of business overnight.

However, to succeed they will need to continue to evolve to meet changing client demands and needs. 

How do you harness the headlines? First, evaluate: How do they relate to your clients, both current and future? How do they affect your business goals?  Evaluate the news based upon the degree to which items relate to your service offering or resonate with your clients’ expectations. Also consider: How transparent are you? How do you communicate this to clients? Is your service model sustainable?

Whether you operate an advisory firm or a business that provides services to advisory firms, the closer your client service offering matches your clients’ expectations the more likely that screaming news headlines are irrelevant. It is the responsibility of the editorial staff to entice you to read the articles, so they will go over the top when they need to. It is your responsibility to become informed – and then decide, purposefully, whether and how to act on the information. 

It is essential for every advisor, advisory firm and financial service provider to look inward at their business and how it is positioned on a regular basis. You need a well-developed understanding of your business – its strengths and weaknesses – before you respond to industry predictions or trends. Otherwise, you will not be able to put what you read into context. Most advisors and firms do not have a 100% accurate view of their business. They need to look at their current client service model, what is relevant, what needs to be improved and how to make it sustainable given their capabilities and resources. 

Keep reading the industry articles. But step back from the ledge.  Consistently successful people tend to be students of their business – but they know how to separate the interesting from the irrelevant. Put the news in context – and harness it to your advantage.


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