Looking Back at the Advisory Profession 20 Years from Now

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In an article earlier this month, Financial Advisor magazine offered a purported look at the financial planning/advisor world of 2034 – 20 years from today.  In my view, their vision of the future was not, well, terribly futuristic.  The article profiled an advisor who mostly meets with clients via videoconferencing using Google Hangouts and Skype, sends them documents electronically, and has them sign and return them using EchoSign and DocuSign.

Many of you do this today.

The article boldly predicts that wirehouse organizations will still be around in 20 years, but they will be smaller entities because so many of their brokers will have left.  Online investment advisory services, like those I profiled in this publication last year, are predicted to gain modest market share, and there will be a trend in the fiduciary corner of the profession away from AUM-based pricing models toward retainer and hourly compensation.

Those forecasts suffer from the same problem: they focus on trends that are already visible today, and thus end up predicting the world of 2016 rather than the world of 2034.

A lot happens in 20 years.  Look back at advisory practices in early 1994, when CompuServe and American Online were the Internet, people didn’t communicate by email, the Charles Schwab organization had not yet launched the first institutional platform and fee-only advisors didn’t have a viable business model or back-office platform.  No mobile devices, of course, and no cloud-based software or client data downloads.  Back then, people thought portable computers were a pretty cool new idea.  Apple Computer was still selling the SE/30, and a secret team was about to introduce the Newton PDA.  The Morningstar style box had been introduced the previous year, yet most financial advisors were still building portfolios based on the “investment pyramid” rather than the efficient frontier or Monte Carlo simulations.  The first Bengen drawdown research had not yet been published.

So I’ve powered up my time-travel hardware to take a clear look at the year 2034.  I’ve received budgetary approval to make a long-distance phone call into the future, and conduct a real interview with a successful advisor in that time period.  Yes, it was expensive.  But nothing is too good for our readers.

Q:  Hi.  I’m calling from the year 2014 with a few questions about what the profession is going to look like in 20 years.  Do you have a few minutes?

Advisor:  Sure.  By the way, you have a heck of a Super Bowl to look forward to.  I won’t spoil it by telling you the score.

Q: Thanks for the consideration.  By your day and time, I suppose the profession has finally seen the last of the baby boomers, and it’s Generation X and Y running things now.

Advisor: You would think.  A surprising number of those old guys are still hanging on and probably will be doddering around our industry conferences forever.  The way that medical science is extending peoples’ lives, the joke we tell each other is that there will be centenarian successors waiting for their chance to take the wheel.  But yes, most of us have taken over from the founding generation, and it was our generation that turned their practices into real businesses.

Q: And you’re probably a lot lazier and less loyal and more focused on that silly work/life balance thing.

Advisor:  Funny you say that: that’s exactly how we feel about Generation Z.

Q: So tell me how you spend your time these days in the office.

Advisor:  Right now, my online avatar is answering a few questions for some of my clients’ avatars, mainly about their portfolios after the Fed’s big announcement yesterday and the latest update on the Greek debt crisis.

See full article on Looking Back at the Advisory Profession  20 Years from Now by Bob Veres, Advisor Perspectives.

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