There has been a great deal of discussion in the past few years about traditional advisory roles and whether they are best left as a reminder of 20th-century private banking. Many arguments seem to support that, given that information technology and artificial intelligence can now process and complete much of the work more effectively than advisors can, Carina Schaurte writes for finews.first.
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
Until now, the role of advisors had two main characteristics. They keep abreast of financial market developments and are either prepared to make investment proposals under a mandate built on classical portfolio theory or suggest individual trades for short-term returns. This is now done by specialized investment experts or digital solutions, highlighted by the success of robo-advisors.
There are also advisors who understand their roles as being a relationship manager, almost a client «Liaison Officer» for lack of a better term. But the number of clients who fit this specific psychographic profile and who appreciate being wined and dined, and are prepared to pay for it, is waning with the new generation.
Other, less appreciated facets of advisory roles include that of a product salesperson or administrator, particularly when it comes to regulatory requirements. Forms need to be completed and information needs to be requested and received. It is a job that takes a great deal of time, even though the value generated by an advisor when compared with a machine is at best marginal.
«Frequently, clients are not even aware of their own financial needs and priorities»
Even if the basic needs of clients, paying for daily living needs while building and/or maintaining wealth, have been the same for the past 50 years, the need for flexibility has risen enormously. Whether it is a joint purchase of a house for a couple that then gets divorced, requiring the financing to change – or old age retirement that needs to be replanned when a decision is made to move overseas, advisors must be flexible and agile. They need to anticipate different scenarios and options early in their advisory roles and review them regularly afterward.
Frequently, clients are not even aware of their own financial needs and priorities, or may they just want to have their cake and eat it. That is why in the future advisors will have to become «Financial Coaches». By asking specific questions and keeping in regular contact with clients, they will have a better picture of their overall needs, for example after significant cash events, or in relation to a client’s risk-taking capacity and their psychographic profile. They will be better able to identify them and address them effectively.
«These are not the trivial questions they are commonly thought to be»
As with personal coaching, it will be about helping the client look at themselves in the mirror and showing them the demands and needs that they can reach and the ones they can’t, and what the financial options and consequences are.
They will be able to find out what financial leeway exists, what financial risks the client feels comfortable taking (and not just what they are prepared to lose) and what the financial objectives are. These are not the trivial questions they are commonly thought to be.
«The advisor must move within a larger network»
To be able to do this well, the advisor must redefine her or himself as an agile project manager who thinks in scenarios, breaks everything down into medium and long-term targets and coordinates everything with experts. The advisor must move within a larger network instead of being a general practitioner doing a bit of everything by themselves.
Even when communicating with clients by different individual, corporate and social media channels based on a tailored «customer journey», personal contact will remain important. The human factor is and will remain central to an honest personal relationship and the basis for long-term trust between the client and the bank.
As an independent advisor and expert, Carina Schaurte supports asset and wealth managers both in strategic issues and in their efficient implementation. She builds on more than 15 years of experience in strategy consulting and the financial industry. The topics of sustainability and impact are particularly close to her heart. Therefore, in addition to her business administration studies at the University of St. Gallen (HSG), she also completed a Master in Leadership in Financial Development.
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