Good morning
This past January PFGC wrote about the possibility that the new SEC Rules for how brokers/advisors engage our clients could include title reform. Meaning that we could no longer call ourselves advisors if we are not conducting ourselves as fiduciaries. The SEC has published the proposed new rules and title reform is a prominent part of the reform package. Now there is a long way to go but once the proposed new rules were posted for comment, the next 90 days, this discussion on titles has expanded to also include "planner". The firms have fought, and won, for rules that have been best described as "suitability plus" but they may have potentially sacrificed our titles as Financial Advisors and Financial Planners.
Investment Professional anyone?
Next PFGC has published a new webinar on Big Data/AI and the Financial Advisor Business Model. Link: https://attendee.
Over the weekend an article appeared in Investment News on the new AI CRMs and how the big BDs are best positioned in this space. Link below:
PFGC's webinar explores how Big Data/AI will have a huge effect on two main business processes of financial advisors. Relationship Management, CRM, and Investment Management, firm investment models. The CRM PFGC explores is not our old CRM packages we are used to working with. On the contrary the industry is running down the road to introduce Google, FaceBook and Apple like capabilities to assist FAs in managing their books. The average FA has 160 relationships and we have not contacted over 40% in over a year. This is all about to change.
The new CRMs will extend our understanding of client needs and assist us in developing a seamless delivery of strategies to a much larger client base. PFGC believes that we will be managing up to a 1,000 different relationships in the the next ten (10) years.
Big Data/AI will also drive the development and adoption of firm driven investment models. This is a little tricky for us as we view ourselves as someone who manages money to assist our clients in meeting their needs and goals. It is core to our offering and our clients still view us, 59% of them, as the person who manages their investments. Forty-six, 46%, percent of clients view us as Financial Planners. I wonder what those two numbers looked like ten year ago? Big Data/AI will challenge this view and in PFGC's opinion change it forever.
These two major trends have implications on how and where we spend our time as our business models morph into the future. The Big Data/AI discusses all of this in detail.
PFGC believes that the RIAs have peaked, in market share, and will be at a significant disadvantage moving into the future as technology spend is nowhere near where they can be competitive. The new CRMs will be most effective in a well defined ecosystem versus an open architecture and this will challenge a core RIA offering premise of picking your technology components and cobbling them together.
But the biggest change will be the value-added firm Big Data/AI driven tax efficient Direct Indexing models that will demand premium pricing for access. Firms that have a deep institutional knowledge of running complex algorithmic trading models will enhance these offerings with Alternative Real Time Data sources that will effectively manage each individual's Risk and Behavioral Profiles in a tax efficient manner. Firms like JPM, GS, MS, RBC, UBS, MER and CS will roll out compelling offerings that individual FAs and RIAs will not be able to match.
The next couple of years will change our, FAs, view of what firms we work with and that view will be driven by the technology spend of each firm. Technology Spend will be the number one factor that will drive our employment decisions over the next ten years.
Finally Financial Advisors will need new skill sets that incorporate technology to become the true Robo-Advisor and these skills will have to be backed up by designations, the CFP and the CPM. There are many things we can not control but we can control our own education. The CFP for financial planning and the CPM for portfolio management.
We are all about to embark on a long journey of change and every journey starts with one first step, take your first left-footed step today!
Danny
