Once upon a time, the role of the financial advisor was pretty specific. Their job was to understand your financial situation, explore investment options, and then make a recommendation back to you as to how best to invest your money to meet your goals.

That role is changing, though. Let’s take a look at the forces at play, shall we?

Technology

Technology like robo-advisors makes it easier than ever for investors to access smart, automated investment portfolios. These platforms can help choose investments for you, and even auto-balance every now and then to make sure you stay invested in the right mix of assets for your profile.

Beyond that, the innovation isn’t stopping here. Today, robo-advisors largely have a few cookie-cutter investment portfolios that they slot all investors into, based on a relatively short survey to learn about your risk profile and high-level preferences.

But in the world of tomorrow, that could all change. Robo-advisors could start asking more detailed questions to get to know your unique situation better. They will keep improving their platforms, where you can access them, and their ease of use when you do. And with the advent of open banking, it makes it easier than ever for them to take more data points into consideration when making decisions for, and communicating with, you as a client.

All other things equal, these technological advancements diminish the value that a traditional financial advisor provides. After all, why should I work with you, and pay you a fee for doing so, when I can do many of the things you would do for me online, myself, for less money?

Of course, all other things are not equal, as we’ll soon see.

Customer Expectations

As the world around us changes, our expectations change along with it. This is as true in the world of financial advice as it is anywhere else, and it’s happening along two main facets.

Where they Interact

Increasingly, customers expect to be able to interact with you on any platform they want. Any why shouldn’t they? After all, I can watch Netflix on my TV, my tablet or my phone. I can consult with a doctor over Zoom. And I can attend a conference in the Metaverse. Why shouldn’t I expect to be able to interact with you, a human advisor, on my preferred platform of choice?

And yes, you read that right: if you’re a financial advisor, you’re competing with the likes of Netflix, corporate North America, and the medicine industry when it comes to your clients’ standards of service. That doesn’t mean you need to be posting on TikTok or whatever; but it does mean you should be taking a close look at how your clients are able to interact with you. If the only way for them to do that is by walking into your physical office… well, your days might just be limited.

How they Interact

It’s not only where people expect to be able to interact with their advisor that’s changing though; it’s also how. People these days are accustomed to, and have come to even expect, personalized treatment, almost everywhere they go. I get served personalized ads on just about every platform I use these days, and while I’d prefer not to receive ads at all, I prefer ads that are tailored to my interests than ones that aren’t. Now, I just find it annoying to be served an ad on, say diapers, which has no relevance to my life at all (talk to me in 40 or so years and I may change my tune).

In a similar vein, I can walk into a Starbucks or whatever, and order a drink that is completely customized to my personal tastes. I can do the same at many fast-food places, and many of my subscription services tailor recommendations based on my tastes.

So how does this relate to the world of the financial advisor?

Well, more and more, clients are expecting personalized treatment. They want their advisor to take the time to get to know them, their lifestyle, their interests, what’s important to them. Increasingly, and especially with the younger generations, people want more than an advisor; they want a coach. Someone who will help them make connections between how the world of personal finance fits in with the rest of their life.

The lines around the edges of where the role of the financial advisor ends and the role of the life coach begins are starting to blur. This is both a scary proposition and possibly one of the greatest opportunities the industry has ever faced.

Which advisors will win in this new world?

The advisors that will win are the ones who are able to adapt to, and take a leadership role in, the changing preferences of clients. As technology increasingly renders your ability to “beat the market” negligible, the competition is going to become more and more about who provides the human element that clients are looking for.

Technology can never replace that part of the job, and it’s always been one of the most important aspects of the role anyway. Going forward, it’s just going to be even more central, and in new and exciting ways.

Wrapping it Up

As the world of investment technology continues to progress and evolve, clients are increasingly going to demand new skills and ways of interacting from their financial advisor. The ones that are going to win a disproportionate share of business in the future are the ones who swim with these currents of change, rather than try to paddle against it.