Embracing the future of wealth advisory

Aug 15, 2018

By David Finley

I’ve recently had an opportunity to meet with many of the top leaders of the wealth management  industry in Canada and frankly discuss with them the challenges facing their businesses. Here are some observations.

Disruptive trends are everywhere

In virtually every conversation, the topic of disruptive technologies and trends remaking the wealth management industry has come up. The good news is that everyone is talking about these issues:

  • robo vs. human advice;

  • The democratization of investment solutions;

  • margin compression (downward fees and rising costs);

  • Intergenerational transfer of wealth (now in full swing);

  • aging advisors and aging clients;

  • artificial intelligence, machine learning and the remaking of finance in the fintech model.

And yet, the bad news is that we aren’t talking about the biggest issue in wealth management today, which is...

There are too many advisors

The wealth management industry is bloated and overcrowded. There are simply too many people calling themselves “wealth advisors” chasing far too few affluent households.  The math doesn’t add up. Couple this with the fact that it’s increasingly difficult for investors to differentiate one advisor from another, a situation that is only worsened by the industry’s spending on advertising, media sources, etc.

Industry transformation will take longer than you think.

While all of the disruptive trends are having an impact on today’s wealth industry – and will continue to have an impact – the unwinding of yesterday’s legacy business models is going to take a lot longer than most people think. It won’t happen in the next 3-5 years, but more likely in 5-10 years, as older advisors and industry leaders manage a great “gray” transition.

So, the challenge facing wealth advisors and the firms they work for is more than just deploying a new technology here, and accommodating a new regulation there, or instituting a new compensation grid. The challenge today is to think very hard about transforming your business model and how to best position a business or practice in the changing reality of the wealth industry.


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