The lure of big money draws newbies to the industry. Running
your own business puts advisers in positions of power. You chart your own
course and succeed or fail based on your own decisions. It feels powerful to
advise a network of clients who need your expertise to navigate the markets.
You might be asking,
"Where's the glory?"
It's true some prospects run for cover the moment they hear
the S-word ("stockbroker") at a cocktail party. But if you get over
the ego blows that come with any sales career, it's a heady experience to work
with CEOs, sport superstars, and other success stories who appreciate the way
you take care of their families.
Too bad wealth, power,
and glory are seeping away.
Firms have clamped down on cowboy behavior of yore, the
stuff stockbroker legends are made of. That's not all bad, and probably
inevitable as investing becomes a basic savings technique for retirees who
can't afford to lose big.
But the full-bore focus on compliance is squashing
entrepreneurial instincts, robbing advisers of opportunities to take the risk
that once proved their worth and made them valuable to clients. Now, they're
encouraged to push highly compliant, model portfolios and to pad their files
with War-and-Peace-sized notes about investment recommendations.
Call me crazy, but I
don't think anybody goes into wealth management for the paperwork.
The day could come when advisers evolve into a lower-paid,
Stepford strain of non-thinkers who simply implement investment solutions that
protect firms from lawsuits. There's not much wealth, power, or glory in that.
Technology is another challenge to the traditional rewards
of wealth management. Knowledge and access to information used to differentiate
value-added financial advisers from the guys and gals who go through the
motions.
But now, courtesy of the Internet, clients don't always need
us. With a little digging, they can easily locate what they want to know about
any investment-fees, past performance in down markets, even what other industry
professionals think.
Do you hear the
wake-up call?
The Internet will put downward pressure on pricing as
clients routinely assess if they're getting more from their advisers than what
they can find somewhere else for free.
How can a hungry,
financial adviser fight back?
Financial guidance must be more sophisticated. That makes
firm-sanctioned asset allocation models a legacy of "easy money"
days-even if the traditional advice industry hasn't yet realized its days are
numbered. The graphs and bar charts added value when clients were less
knowledgeable. Today, they're nothing special. They certainly won't protect an
adviser's business from websites that offer similar services for free. The more
diverse your knowledge, the more you drill down on the details, the less
vulnerable you are.
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