4 trends to build resilience in your financial and wealth advice practice

By Mandy Murphy and Shannon Loots, Business Coaches at Old Mutual Wealth

The widespread adoption of digital technology during the two years of lockdown and pandemic has changed how consumers perceive value, and this demands that the financial and wealth planning community reassess its tried-and-tested strategies and value propositions.

Four trends will shift the industry and change the way businesses operate and compete.

The disruption of the last few years has changed the way clients perceive value, and therefore, how wealth advisers will need to create and deliver value. The accelerated adoption of digital technologies by clients means that financial advice practices have to shift gears from simply differentiating their value propositions towards offering hyper-personalised advice solutions and client experiences.

Trend 1: Hyper-personalisation 

Hyper-personalisation is “differentiation on steroids”. Financial planners have long segmented their client base into two or three groups of clients and offered a basket of products and services to each. In the hyper-personalisation scenario, the financial planner must understand that each client within a group wants to be recognised as an individual, and will thus demand a unique experience. 

This high-touch approach requires getting to know your clients on a deeper level by learning about their beliefs, preferences and values, among other traits, and then bringing that insight into their financial planning engagements and client initiatives. 

Trend 2: Employee wellbeing

The second trend, identified as employee wellbeing, is seen as a non-negotiable for financial practices in their quest to deliver on a hyper-personalisation strategy. Employers need to ensure that their employees have what it takes to rapidly and effectively implement the changes brought about by emerging trends … they must provide clear direction and vision to ensure employees buy-in to the shift in strategy.

This trend exhibits as the ongoing shift from purely financial remuneration to performance incentives that recognise and reward continued high performance, while contributing to career progression and overall employee wellbeing.

Trend 3: Re-platforming

Business and IT operations are becoming increasingly automated; if you are not modernising your applications [and] your systems are not talking to each other, it does not really matter that you have a high-performing team, introducing the third trend as re-platforming. 

If your business is not operating [optimally] in this fast-paced environment, you risk business irrelevance”. Re-platforming is not simply the latest ‘buzzword’. It is a ‘business management lens through which all systems are integrated and operational efficiencies enhanced, given the available technology.

There is a two-part question that financial planning practices should consider when navigating this trend. First: What does your ideal client experience look like and how does your existing technology support this? And second: How can you create a bespoke solution that aligns your existing technology with new technology? 

Care should be taken not to chase ‘shiny new systems’ marketed to businesses, at the expense of the client experience.

Trend 4: Intergenerational wealth planning, family legacy and client longevity

There are growing concerns among financial planners that intergenerational wealth transfer mechanisms are failing. Anecdotally, the industry expects assets totalling around R30 trillion to transfer to beneficiaries and heirs over the next 20-years.

Intergenerational planning prepares the wealth for the family; family legacy planning prepares the beneficiaries for the responsibility that comes with that wealth; and longevity addresses the possibility that clients may need to dip into planned inheritance for emergencies during their lifetime.

Financial planners should create a safe and inclusive space for conversations between the client, the spouse and where possible the extended beneficiaries and heirs, regarding the vision and purpose of the planned legacy. 

This conversation should result in a Family Charter, being a document setting out the envisioned legacy and any decisions made during the family discussion. 

Acknowledging the beneficiary accountability component of intergenerational wealth planning is an added responsibility that planners should focus on. 

Building a resilient practice goes beyond anticipating new trends to implementing the changes necessitated by those trends. 

Businesses can tackle change management using a simple three-step process of anticipating, designing, and implementing change. 

We do caution, however, that you give each of these steps a fair amount of attention, because favouring one to the exclusion of another usually translates into failed change-management initiatives.

Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za