How Advisors Can Succeed in the Next 5 Years and Beyond

In her interview, the popular industry speaker discusses how more younger advisors will change wealth management and the strategic, practical idea for advisors to offer clients comprehensive "one-stop shops."

Technology and what it can do for advisors cannot be overlooked, emphasizes Rudin, who in addressing a perceived shortage of advisors, calls tech “the white horse coming to the rescue of everybody,”

THINKADVISOR: You highlight these trends: the growing demand for wealth management; a decreasing number of advisors; the wealthy getting wealthier; the world of advice/wealth management getting increasingly complex and more holistic. What do these trends mean for the future of wealth management? How do advisors adjust for the opportunities?

APRIL RUDIN: The way advisors serve people will change drastically in about five years and five years after that. Advisors will be able to serve more people with more personalized solutions.

Everything that has worked for the advisor in the past is not going to be what makes them successful in the future. They need to embrace tech and rethink their business.

Fewer people are going into the industry. McKinsey predicts that within the next 10 years, it will be 100,000 advisors short globally. But that number is overstated because the white horse that’s coming to the rescue is tech.

THINKADVISOR: You define three types of wealth management success: client success, generational success (money moving from old to young) and advisor business success. Should advisors tackle all three simultaneously?

RUDIN: Yes. Figure out what kinds of clients they serve best, target those clients as prospects and then onboard them. Advisors need to do more strategic planning, thinking about where their practice is now and where they want it to be.

THINKADVISOR: What are today’s advisors not doing right? What is it that they should do?

RUDIN: There’s been an unwillingness to adapt. Some of that is because this is a traditional industry serviced by older white male advisors who have been reluctant to change the way they do business.

As younger advisors come into the workplace, more women are recruited and more people of color, the advisors will be more open to change and more reflective of the changing base of end investors.

THINKADVISOR: Many investors feel left on their own and are stressed about retirement planning. How can advisors help them understand that more planning leads to less stress?

RUDIN: Most advisors don’t have a retirement plan themselves — they have an exit strategy. Most firms aren’t training advisors in retirement and decumulation. So it’s hard for advisors to talk to their clients about it.

[Instead of asking clients, “What’s your risk tolerance?”], advisors should be telling them, “Here’s how much you need to save monthly over these many years in order to have a comfortable retirement.”

THINKADVISOR: How can advisors become clients’ coach for life? 

RUDIN:  I don’t love the word coach. But we’re seeing a huge expansion of services beyond stock picking as advisors move to holistic financial planning.  More and more firms are offering cash planning, philanthropy, insurance, banking and lending by RIAs, and other services.

So by offering more services, they will become a more essential person in their clients’ lives, and that will evolve.

Large firms are offering those services by building them in-house.  Others are bolting them on with specialty firms. They are doing this in order to have one-stop shops for retirement, which are going to be really important for clients.

THINKADVISOR:  What tools and resources should they include in the one-stop shops?

RUDIN:  They might offer Medicare consultation or other services relative to retirement, for example.

You want to make sure you have in-house expertise so clients are coming to you for all kinds of advice whether it’s for estate planning or whatever the topic.

It’s about the ability to offer more holistic advice, not just financial planning. 

This will become more and more important and will increase your ability to have greater client success and better client satisfaction to serve more of their needs, rather than parcel them out to others. 

THINKADVISOR:  Will there be new opportunities for serving UHNW individuals and family offices?  If so, how can advisors take advantage of them?

RUDIN:  Most advisors cannot take advantage of these [opportunities] because they aren’t trained to serve UHNW clients and family offices.  It really is a specialty to serve complex needs of wealthy people. 

There is a great deal more knowledge you need because it includes several individuals, multiple gens, tax planning.  There is just a lot more that these clients require.

There will be a huge opportunity for advisors to serve that market, but advisors need to make sure they are qualified to do that.

Taking on a client like that without the expertise is not wise for an advisor because it might impact their reputation management or their overall cost in serving them if they are not set up to serve them well.

THINKADVISOR:  How can advisors acquire the needed expertise?

RUDIN: They can become part of a team that serves UHNW or family offices, or find a mentor or get certification for serving these clients.

It’s not something that you just put out your shingle and say “We’re serving wealthy people.”

THINKADVISOR:  What about social media’s and digital marketing’s roles in future wealth management?  Will they expand?

RUDIN: Yes.  Traditionally advisors thought that the best way to grow their business is through referrals.  But referrals are one by one.  Digital allows you to target individuals that are a good fit — your ideal client profile (ICP).  Therefore, advisors need to figure out who is a good fit for them.

THINKADVISOR:  How do advisors prevent wealth inheritors from leaving their parents’ advisors?

RUDIN:  I don’t think it even makes sense that they would stay.  What is more important is the opportunity for marketing and getting visibility to this huge gen of clients who is actually looking for new advisors.

THINKADVISOR:  Will consolidation of RIAs accelerate to the point where they rival wirehouses?

RUDIN:  Yes, because the idea of people going it alone and having individual firms is not so attractive.  It’s not easy being an individual business owner running a firm — to create a tech stack and marketing stack [and so on].

THINKADVISOR:  It seems that with all these changes advisors need to do much more planning.  Right?

RUDIN:  Exactly.  They need to have a strategic plan just like they would in planning for their clients.  They need to do the same thing for their business.