There are technology, client and talent trends reshaping the wealth management industry right now, and firms need to understand if they are ready to adapt to these changes, says the former head of RIA custody business at Fidelity Institutional.
David Canter, now the president of Bluespring Wealth Partners, says there is an expansion in the financial advisory ecosystem, fed by several factors, including the increasing complexity of financial markets, the rising demand for specialized expertise, and the growing awareness of the benefits of seeking professional advice.
That expansion he noted has brought forth a diverse range of professionals with specialized knowledge and skills. This diversity ensures that clients can find advisors who understand their specific needs and circumstances, thereby enabling tailored solutions and personalized advice.
I caught up with Canter, who provided some tips on how firms can analyze their business, and ask themselves if they are ready to adapt for future changes in the industry.
Click on the video below to watch the full interview.
Transcript:
There are two big trends that I think advisors need to be aware of – one, the birth and the expansion of what I call the platform, the wealth management or RIA platform. The platform is designed to give leverage to advisors, as opposed to a firm that just serves clients. So a set of services and capabilities that help advisors grow, compete and succeed in the marketplace.
The other trend is just the continuing self-renewal of the advisory ecosystem. The number of advisors continues to expand year-over-year. So despite all we hear about consolidation or concentration in the profession, it's a self-renewing ecosystem. I think that's fascinating and provides opportunities for advisors and investors alike.
Self-renewal in the ecosystem refers to the number of advisors. Advisors keep minting new firms. If you look at the data, there was 6.7% year-over-year growth in the profession – I think right now, we're about 15,000, SEC-registered advisors, and actually around 20 to 23 state-registered firms.
It's because investors are craving or seeking fee-only or fee-based advice. Not only are advisors prospering, but investors are gravitating to the model; that's why I say self-renewing. That's also why I say there's a bull market for advice because not only is the number of advisors growing, but also the number of investors and assets that are served by advisors.
In my head, there are really three things that you need to think about from an action-step perspective. One is where you want to be; What got you here is not going to get you there. Think about what your vision is for the future. Ask yourself, what do I want, why and why now? What's really in the best interests of my clients, myself and my family? Those are the three questions I always ask. Be clear about your model.
There are also five questions that all advisors and advisory firms need to be aware of.
What's your target market? What are your capabilities? What's your org structure? What does your infrastructure look like? And finally, what's your unfair advantage? And that unfair advantage is something that can't be easily replicated, duplicated, or frankly copied.
All advisors have one unfair advantage that they are oftentimes not even aware of. And what that is, is that they know more about their clients, their client's financial lives, and in many cases, their broad lives than almost anybody else in their orbit.
