Charles Schwab’s announcement Thursday that it’s now giving retail clients a free financial planning tool is another wake-up call that advisors have to up their game as multiple players digitize more processes, industry watchers say.
“The news is yet another reason advisors need to worry about the future of their businesses and need to pivot ASAP to offering an enriched service offering that emphasizes their professional approach beyond investing,” said Tim Welsh, head of the consultancy Nexus Strategy.
“Once again, Schwab is taking away yet another aspect of their value proposition,” Welsh added.
As robo-advisors and huge industry players like Schwab “keep moving” into the areas previously dominated by financial advisors, “advisors need to think like sharks and keep swimming or drown,” said Craig Iskowitz, head of the consultancy Ezra Group.
This means offering more advice, specialized financial planning, alternative investments and/or distinctive services for a particular client niche, like retired pilots or bass fishermen, Iskowitz explains.
“You have to offer the best service to survive,” he said, and that means surpassing “what Schwab is giving away for free. It’s about finding your niche and then excelling at it.”
More and more players are offering free financial services.
As happened to traditional barber shops facing Supercuts, how do you stand out and charge more? “The story is that a consultant told the barber to put up a sign that says, ‘We fix $7 cuts,’” according to the consultant.
In a climate in which there’s a lot being given away, the question becomes, “What do you offer?” Iskowitz asked. “The answer is better value … . You’ve got to explain and justify your value proposition or you’re out of business.”
Positioning Is Key
Faced with another step that “commoditizes planning,” advisors need to pivot to prospect, according to Gavin Spitzner of Wealth Consulting Partners.