Looking Ahead to 2016: What Matters Most

Beverly Flaxington

Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

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Dear Bev,

You work with advisors every day. What do you think will be the biggest challenges and opportunities we’ll face in the coming year?

Michael P.

Dear Michael,

I often ask the advisors what their top three obstacles are. While some obstacles have changed over time, many have been around and continue to be challenges. That’s the funny thing: we know about the problems, but we don’t take the steps sometimes to solve them. The nice thing about challenges is that the flip side is often where the opportunities lie. Here are my top three challenges for the coming year:

  1. The widening of the generational divide. A lot has been written about the aging of the industry, the issue of succession planning and the different styles of communication between the different age groups. While many firms are dealing with the issues, I don’t see many firms solving the problem very well. Younger people want to be understood, to learn and to have opportunities for success and advancement. Older people want to continue to do what’s worked and retire with a nice revenue stream from their investment over the years. Now that is, of course, a gross oversimplification, but it has a great deal of underlying truth. The different generations are a bit like a bad relationship where each person says, “I’ll change once you do!” Getting to understand each other’s viewpoint, giving younger advisors opportunities to grow and succeed and creating exit strategies for those who have built value over the decades will be ongoing challenges and very important ones to solve.
  1. The increased importance of consultative, whole life financial planning. Yes, I’m aware of the threat of the robo-advisor and the desire of many investors to press a button and get an answer. However, there are just as many people who want someone to understand them and help them with all of their financial needs. (If you have read #1 above, you may see a theme – we all want to be understood!) Traditional asset allocation and portfolio management without building relationships and taking the time to truly understand investors’ needs, wants, values, desires and fears is going to leave a lot of opportunity on the table for advisors. While there may be loads of accessible information on how to invest, most people still need someone to look at the whole picture and help them make sense of how all of the pieces fit together. Working with advisors in firms large and small, I’m always stunned by how little they know about their clients beyond asking about family dynamics, vacation destinations and retirement goals. There is an opportunity to embrace the role of advisor as central financial coach and consultant to the client and address an expanse of financial needs.
  1. Being facile and proactive while living with uncertainty. The stock market ended on a sour note in 2015 after years of double digit gains. The political scene is a bit wacky, terrorism is in our midst, China’s woes have already impacted our markets and the economic recovery is questionable at best. Advisors may not be able to control any of this, but they can proactively help their clients understand what’s happening and how it might impact them. They can become educators for their clients and COIs. And to deal with the vagaries, they can learn to manage their own stress levels and focus on those things that can be controlled or influenced. It doesn’t look as though it will be a smooth and comfortable ride in 2016, so make a commitment now to be prepared for it.