How COVID-19 is changing the way financial advisors work

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How COVID-19 is Changing the Way Financial Advisors Work — and the Way They Work With Their Clients

As an award-winning financial marketer with over 20 years of experience in this industry, I have learned to expect the unexpected. Sudden market crashes, the devastation of 9/11, the sustained pain of the housing crisis and the resulting Great Recession — I have seen these emergencies come and go. But I have never seen anything like the current COVID-19 pandemic, and the strain the virus is putting on my industry is almost too big to contemplate.

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A brief look at the numbers and trends I have been witnessing is very eye-opening. In the past, the typical financial advisor might see a single client three times a year, and each face-to-face meeting was another valuable sales opportunity. While client visits were already in decline, with that ratio dropping from the aforementioned three to only approximately one client meeting per year, the COVID-19 pandemic has brought them to a grinding halt. Let that sink in for a minute.

Forced to Adapt

When the social distancing recommendations were implemented, those face-to-face client meetings disappeared overnight, completely changing the way financial advisors do business and how they serve the needs of their clients. And while smaller operators have been better able to adapt, others have been hit especially hard.

With UBS, Morgan Stanley and other large wirehouses shutting their doors, wholesalers have been among the hardest hit by the COVID-19 crisis and the new normal of self-quarantining and social distancing. These road warriors have been forced to invert their operating basis, using virtual meeting technologies they’d never needed to learn before and working harder than ever just to stay in the same place.

From a practical standpoint, wholesalers and fund managers have been struggling with the technology that is now their only connection to their clients. But they’re not the only ones dealing with these problems — advisors are also facing challenges concerning remote work, and many of them simply don’t know how to do it. They’ve even been asking me how to use Zoom for virtual meetings and how to handle multiple clients when they only have a single telephone. Ramping up telecommuting efforts is difficult in the best of circumstances, but implementing such a massive effort in the midst of a crisis has been challenging beyond belief.

Anticipating Residual Impacton Financial Advisory Business

Some of the advisors I work with have also expressed concerns that the current state of affairs will shift from the new normal -- for now -- to a permanent way of doing business. More specifically, advisors who got into the business for the personal connection and the satisfaction of a handshake are worried that staying virtual will inevitably lead to a loss of in-person relationships and sales as well as negatively impact client retention.

It is easy to see where these concerns are coming from, and why they are valid. Without the face-to-face interactions and personal connections inherent in the financial advisory business, clients may be more likely to leave. Meeting with an advisor over Zoom is far different than meeting in person. In this kind of environment, what's to stop the kid who just inherited money from his parents going elsewhere?

How can financial advisors serve their customers effectively when their offices are closed? How will large financial advisory firms react to the new normal? Will they keep their physical branches closed to save money? Will they train their staff on the intricacies of Zoom meetings and FaceTime chats? These are the questions I am getting, and the answers have been hard to find.

To be sure, some of these shifts in the financial industries were already underway. Solo operators were already selling their practices to the big guys, and massive mergers have combined the likes of TD Ameritrade, Scottrade and now Charles Schwab under a single umbrella. Even so, what I am now seeing is an acceleration of these existing trends, and the future is still uncertain.

Through it all, the reality is that financial advisors are adaptable and amenable to change — and they have to be. In this time of uncertainty, that adaptability will be tested to its limits, and only if we make the most of this opportunity to acclimate to the new technological trends will we have a chance of making it out unscathed — or perhaps, even stronger than before.

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About the Author

David Partain
David Partain isSVP of Northern Trust as well as CMO of their subsidiary, FlexShares.

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