Top 5 Trends – THE BIG IMPACT
2020 has been nothing short of a tempestuous year. Despite the upheaval, there is plenty of optimism to look forward to. Here are the Top 5 trends to watch out for that will impact and revamp the financial planning industry over the next 10 years.
1. Radical Lucidity
The ability to clearly explain Goals-based Financial Planning to clients will become increasingly popular, especially amongst the next generation of financially and tech savvy consumers. At PrimeWealth, we strive to achieve ‘radical lucidity’ by being completely transparent from the outset with our clients about what to expect in terms of service standards and fee disclosure so that trust can be established early on and the lines of communication remain open and transparent. This is going to be an upward trend in the coming years.
2. Generational Transition
This refers to the generational transfer of wealth and clients. Research suggests over 65% of Small to Medium Business Owners express a desire, during their lifetimes, to transfer their companies and other assets to the next generation. However, it has been estimated (on an average), fewer than 30% succeed in doing so. These facts concede that successful generational transition and execution are complex management challenges that often require attention early on. With Baby Boomers entering the retirement phase, it is their children, the Millennials (20-37 years old), who become the ‘eligible’ cohort of clients for financial planners. Many Millennials are presently at a life stage where they actively seek advice as they deal with young families, their careers, buy a house, or simply follow their parents’ footsteps of seeking professional financial advice. However, many society members may inadvertently advocate that ‘these Millennials might still be too young to seek professional advice.’ The key thing to remember here is that the Millennials are far more tech-savvy and financially minded than the previous generations due to their experience with technology and digital media. They read books, watch videos, listen to podcasts, and are entering into their adult life with far greater awareness than the previous generations. Hence, they are far more susceptive to seeking professional advice early on in their life than their older counterparts.
3. Transformational Relationship
As big banks move completely out of the advice space as it has become too risky for them, the financial planning industry, on the other side, is rapidly evolving and transforming. Financial Planners are seen to be far more transparent in their approach. They stay ahead of the curve by focusing on friction points, e.g., they are mindful of not using too much ‘industry jargon’ as a friction point in the client meetings and possess a more strategic long-term vision. For instance, when the global pandemic intensified, PrimeWealth modified its business and work approach. More meetings were held virtually with clients, which further cemented the relationship and trust with clients and their families. Forming great transformational relationships is proving to be quite revolutionary, not just for the financial planning industry but all businesses in general.
4. Skill Set Diversity
Another huge trend accelerating in the financial advice space is Skill Set Diversity. When the business revolves around providing proactive financial advice to a diverse clientele, one must consider these primal points such as – their age, gender, interests, industry, ethics, and values. This means implementing diverse skill sets in the business is now more crucial than ever. Traditionally, advice firms focused on hiring good sales and numerically inclined people in the past. However, as the profession’s nature has advanced and evolved, the impetus is more on understanding the client’s needs and goals. A lateral shift towards embedding more people-focused skills within the business has been observed. For instance, here at PrimeWealth, it is all about getting into the ‘nuts and bolts’ of what is really happening with a client beyond their financial circumstances. Besides financial dexterity, empathy, insight, and high emotional intelligence will be a key part of the overall financial planning process.
5. Technology and Digital Media
Global influencers’ perennial favourite, Technology and Digital Media is the last top trend that definitely warrants watching. A robust and comprehensive digital media plan involving liaising with key stakeholders, clients, and staff members can supremely maximise advice firms’ digital presence in the marketplace. Social Media, in the current climate, is a great platform for planners to offer proactive advice digitally to their existing and prospective clients. It allows planners an opportunity to connect and engage with their audience on topics relevant to their client’s needs and receive feedback instantaneously via digital analytics and responses. These responses can inherently reveal underpinning factors governing consumer behaviour. Planners can utilise this feedback and go into client meetings armed with those valuable insights, enabling the discussion to be as relevant and relatable to their clients as possible.