An industry in flux

As part of our recent Global IMPACT event we hosted 3 industry experts, well-versed in managing advisory practices, in conversation with Richard Garland (Managing Director Global Advisor, Ninety One).

Aug 27, 2020

6 minutes

As part of our recent Global IMPACT event we hosted 3 industry experts, well-versed in managing advisory practices, in conversation with Richard Garland (Managing Director Global Advisor, Ninety One).
As part of our recent Global IMPACT event we hosted 3 industry experts, well-versed in managing advisory practices, in conversation with Richard Garland (Managing Director Global Advisor, Ninety One). They were Marie-Laure Humbert (Business Strategy, Goldman Sachs Asset Management) Tiffany Perkins-Munn (Managing Director, Head of Team RAD (Research, Analytics & Data), Blackrock) and James Rainbow (Head of UK Distribution and Latin America, Schroders).

This is an extract of highlights from the discussion and is edited for readability.

Richard began by asking the panelists to address how advisors are adapting to the new, virtual, world. Marie-Laure Humbert, who has interacted with hundreds of different advisors in both Europe, the Middle East and Africa, says the following leadership themes were adopted by successful advisors:

How advisors are adapting to the new, virtual, world

Immediate impact of lockdown

Tiffany Perkins-Munn (Managing Director, Head of Team RAD (Research, Analytics & Data), Blackrock) added that their most recent short-form survey revealed that most advisors (>90%) feel largely comfortable in the virtual environment, especially for engagements with existing clients. Increasingly, however, advisors are admitting to symptoms of “Zoom Fatigue”. When polled in April, a large proportion (>50%) of advisors believed that normal business conditions would return in 4-16 weeks. Polling again in July saw a massive change in opinion – many now believe normality will only return in Quarter 1 of 2021.

In terms of the lockdown’s operational impact on advisors, Richard observed that many advisors have elected to continue working from home even post-lockdown(s). Some large advice firms have even insisted that their staff neither come in, nor physically meet with providers outside the office until at least the end of the year.

James Rainbow (Head of UK Distribution and Latin America, Schroders) concurred with Tiffany that advisors who are most comfortable are those trading on “existing relationship capital”. He also highlighted that, for a great deal of day-to-day servicing, face to face meetings are no longer necessary. This cost saving presents an opportunity to change the advice business model, either to provide new services or to price existing services differently. On the flipside however, activities like growing your business, adding new clients or prospecting for new leads are all considerably more difficult during lockdown. This is a potential game-changer, and a major problem for an advisor still busy scaling their business.

Tiffany expanded that most established advisors are increasingly expecting new prospects to be referrals from existing clients, based on their good service in a time of great turmoil. Marie-Laure reminded us later that advisors must ensure that the “chain of yesses” that leads to new business must lead to referrals as well.

Virtual pitching – a skill that extends beyond post-lockdown

Lockdown work protocols have, however, had some unexpected benefits for clients. Richard pointed out that suddenly it’s now much easier to reach previously inaccessible advisors, who were previously shielded by associates – a direct call is now being answered. Lockdown appears to have given an advisor more time to spend with existing clients, albeit via Zoom.

Marie commented about a Scottish advisor who said he couldn’t wait to get back on the road and back to his old ways, despite gaining significant new business over lockdown. The advisor didn’t realize that he had developed a new set of best practices during lockdown, to complement the ‘old ways’ to which he so desperately wanted to return. She concluded that it’s important to add our new lockdown “virtual pitching” skills to our old ways.

What are these best virtual pitching practices?

  • A well-prepared agenda, with clear content and an objective
  • Being dressed appropriately (smart casual), even for a Zoom pitch
  • Making the technology work smoothly
  • Being explicit and direct, since Zoom doesn’t allow for the same amount of chit-chat
  • Checking back with the client to ensure your objectives are still aligned, being alive to their circumstances and availability
  • Being prepared with a Plan B, and being ready to reschedule in the light of immediate developments
  • And as always, asking for the business!

Richard highlighted that we need to be even more prepared for meetings in these times. It’s back to doing the basics well. Tiffany agreed, remarking that it was astonishing that two-thirds of clients they surveyed had reported not being contacted by their advisors in the early period of the pandemic. From an advisor’s perspective this is a lost opportunity to reach clients and add value, just when it was easier to find people at home and in need of help. Richard also quipped that a personal phone call can be a very welcome interruption for clients suffering from Zoom and email overload.

COVID-19 Impact on growth of advice profession

Richard asked the panel about the impact of COVID-19 on smaller firms – is a wave of consolidation about to break, for example? Tiffany answered that for the moment in the USA, it doesn’t appear to be the case - but there may be a lag. She went on to observe that financial advisors have had to broaden their jobs considerably, as the financial coaching element of the advice process increased with an increase in clients’ financial concerns.

James agreed, remarking that there is still a great global advice imbalance with the need for advice exceeding the available capacity. Most businesses are hence brimming with clients and advisors are struggling to find time, not clients. Bringing new people into the profession requires that we articulate the advice value proposition better. It’s not just about straightforward intermediation or sales. In time, advice will become akin to accounting or law, a profession to which you turn to for advice and behavioral coaching, rather than just for execution.

James went on to say that in the UK, the consolidation situation is different, with “an absolute feeding frenzy” of consolidation. This has nothing to do with the current crisis, but rather the investment opportunity represented by advice firms - high cash flows, and high demand for advice combined with low supply. Capitalising on economies of scale is key to the success of any consolidation strategy - and the private equity players driving UK advisor M&A believe that they exist and can be exploited.

Concluding remarks

Marie-Laure closed by pointing out that the current environment is rich in opportunity for those who are agile and willing to learn. Advisors who have adapted are already reaping the rewards.

James reminded everyone that advice generates more value for clients than asset management, given the wide scope over which advice adds value (including areas like behavioral mistakes avoided, more efficient tax planning and better estate planning). It is a good time to be a financial planner!

Tiffany concluded that that leaning into technology is vital, as well as looking at new areas, ideas and trends, like ESG in the advisor market.

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