The wealth management industry today is enjoying a sweet spot, but like all good things, that will end in time, according to recent panel discussion.
“Fast forward five to 10 years from now and there will be inflection point, a retirement tsunami of advisors,” said Tash Elwyn, president and CEO of Raymond James & Associates, noting that the average financial advisor today is 54 or 55 years old.
“Suddenly there will be more sellers than buyers” of firms, reversing the current pattern, he said. Valuations of firms that have been supported by late-stage economic expansion will be impacted.
Firms that are dependent on technology-enabled advice will be in the best position to handle the scale of clients and complexity of needs, Elwyn said.
“Digitally enabled advisors are going to even better serve their clients in the years ahead than they already so capably served them in years past … We’re doubling down on investing and reaffirming the human advisor as the center of the client-advisor relationship … and so the investments we’re making in client-facing technologies will enable self-service where we think self-service is a client preference and enabler for the advisor to gain more capacity for even greater value add.”
He added that Raymond James continues to pilot its Connected Advisor platform, which will allow advisors to onboard smaller clients and provide them model solutions, but noted that this platform is delivered through the advisor and not directly to clients.
Digitally enabled advisors are better able to handle to handle the current market environment, where costs continue to increase while revenues remain relatively flat and too few advisors are available to serve a growing number of Americans who need advice, said Shirl Penney, president and CEO of Dynasty Financial Partners.
“The only way to fill that void is to be tech-enabled,” said Penney, whose firm counsels advisors who want to going independent and set up their own shops.
Technology allows advisors to concentrate on the quality and services – the “secret sauce” that differentiates them from digital-only advice, according to Penney. “I spend a lot of time with advisors and their end clients,” said Penney. “The empathy, human element to understand the key life events of their clients – that is impossible to automate.”