Community Focus: Jon Corrigan & How Financial Advisors Must Evolve to Survive

by Jon Corrigan, edited by Jonathan Bega

Today, we are doing an exciting blog written by Finaeo friend, Jon Corrigan. Jon co-owns Corrigan Financial and is a group benefits consultant  and Certified Financial Planner ®. In today’s blog, he is talking about the future of financial advisors and how they will have to focus on planning instead of selling products in the future.  

The Future of Clients

To best understand where advisors are going, let’s first turn towards the client of the future. After all, without clients, there is no such thing as a financial advisor – so understanding the trends that will affect them is seriously important. As we enter the fourth industrial revolution, we are watching a transformation from economic childhood to economic adulthood. This is a massive shift. Whereas past generations could rely on their organization, union or government jobs to provide them with a secure retirement, we have seen an erosion of these institutional paradigms since the 1970s. Even today, Canadians without an employer retirement plan are failing at saving appropriately for retirement, with “only 15 to 20 per cent of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement.”

And these institutions are going to crumble further over the next decade as technology speeds the process up immensely. In Canada, some estimates have predicted that automation could replace 7.5 million jobs over the next 10-15 years. To call this a massive disruption is an understatement. There’s also a huge shift away from staying with one company for long periods and towards job hopping. Gen Y’ers who graduated in 2002 had 3.9 jobs on average in the first 12 years of their careers, versus 3.2 jobs for Gen X’ers who graduated in 1992. I haven’t seen data for millennials, but I suspect they will switch jobs even more regularly. In other words, the stable employment income and retirement savings of yesteryear are a long gone dream.

But it’s not all bad news. The sky is not falling. The digital decade has also shown some astoundingly positive changes. Technology has given many people the ability to become economically self-sufficient in ways that never existed before. People with no prior experience can, and are, using technology to create brands and businesses doing what they love. It’s much easier for people to become entrepreneurs and earn money in ways that weren’t even possible ten years ago. Shopify is a worldwide phenom due to its ability to allow the average person to start selling their crafts and wares. Uber lets anyone with a car become a cabbie. Online advertising lets you compete for eyeballs with massive brands in a way that’s never existed before. Even job switching is not necessarily a bad thing – it tends to go hand-in-hand with a faster increase in job salary, as younger job holders saw their wages rise much higher than the 35 [and above] workers” when they switched jobs regularly.

What it does mean, however, is that we’re looking at a fundamental shift in the future of work. And, as Uncle Ben used to say, “with great power comes great responsibility.” Without institutions to protect individuals, the future will require a far greater amount of responsibility from people. We are entering an era where people must take full control of their own financial destiny. This means that as we move forward, financial literacy and education will become musts. People will need to hone these skills to successfully navigate life. And with our lives are busier than ever, most people will need either technology, an advisor, or, most likely, a combination of the two in order to make that happen.

The Financial Advisor of Tomorrow is the Bionic Advisor

In the situation described above, financial advisors find themselves in a very unique position. As clients become more self-sufficient, they will also require more guidance from experts in the field. Advisors are in the right spot to provide great value in these situations, helping guide clients through the financial hurdles they will face, and the unforeseen periods of transition that will become standard for their clients. To do so, financial advisors will have to transform themselves into bionic advisors – advisors who use unique processes, skill sets, and technologies to deliver value to their clients.

At the core, the bionic advisor will be two things:

  1. The bionic advisor will be a financial quarterback
  2. The bionic advisor will rely on technology to service more clients

Let’s turn first to #1.

The Bionic Advisor as an Educator

As mentioned above, we are entering an era where people will be forced to take responsibility for their financial health, both present and future. Unfortunately, as a society, we are financially illiterate. Nobody is taught how to think about money, risk, insurance, or financial planning. Now, when institutions took care of people, that was less relevant. But in economic adulthood, this means that a whole slew of people are going to run into trouble. Trouble when automation puts them out of a job, forcing them to take time off to upskill. Trouble when they develop a critical illness and lack benefits to help maintain stable cash flow. And trouble  when they decide they want to pursue a passion business but have no idea how to stay afloat financially while doing so. 

In my opinion, the bionic advisor’s future job will transform from selling products to becoming a client’s financial quarterback. The bionic advisor will become someone clients turn to to help navigate the financial challenges and problems they are having. And these challenges and problems will be a different set of challenges and problems than those that exist today. What clients will be looking for, more than anything, is someone they can trust to help them through the much muddier waters of financial insecurity and uncertainty.

Today, the best source of financial literacy for adults is in the workplace through group benefits advisors. However, this tends to fall well below the necessary level to really teach people, often being an after-thought for group advisors. It’s true that people with means tend to be taken care of. If you’re a high net worth, you likely have a financial planner, wealth manager, or family office. However, the average, middle-class worker often fails to reach out to financial planners or understand the value proposition. And in a future world where more people are working for themselves, have a secondary job, or potentially are working without benefits, everyone will need this kind of high-touch approach to stay safe.

That’s not to say group benefits will entirely vanish – I believe they’ll always be around, just in different forms. But it seems almost certain that as employees become more transient, benefits will change, and individuals will need to start understanding insurance on their own. Moreover, advisors will need to change too. In a new world, advisors are going to need to re-think their approach to savings, investments, retirement, and insurance compared to a world where their clients had forty years of stable employment and cash flow.

We’re seeing the beginnings of this, with clients increasingly demanding customized solutions and tools specific to their situation. This is already happening in other aspects of their lives, so why not financially as well? Wayne cotton – a well known name to many advisors – coaches advisors to great success by teaching them to work with clients that fit a specific profile and have similar needs. Dan Sullivan, of Strategic Coach, believes that for advisors to thrive, they will have to become “unique process” advisors who work with specific clientele by providing unique solutions for them. In this way, most advisors would likely become very niche in order to provide advice that can’t be generated by apps or programs.

As such, there is a massive opportunity here for the bionic advisor as a quarterback. Such an advisor would work closely with the average person to help them suss out their financial health and generate a financial plan that they understand. As life happens, as things change, the bionic advisor will continuously help monitor their client’s financial health for new realities, helping the client stays focused on the important aspects of their financial well-being.

The Bionic Advisor Will Rely on Technology to Service More Clients

The most interesting aspect of the bionic advisor as a quarterback is that it goes hand-in-hand with technology platforms. To me, how bionic advisors will use technology is very similar to how bookkeepers use Quickbooks to help with their clients’ accounting needs today. There are two major points here: 

  1. Compared to a world without Quickbooks, bookkeepers today can deal with a far larger number of clients 
  2. Quickbooks can also be used by small business owners on their own, not just bookkeepers. However, many business owners still opt to hire a bookkeeper to save time and gain peace of mind.

I believe financial advisors are going to see technology deliver a very similar set of outcomes. First off, by adopting technologies, they will be able to create great efficiencies in their businesses. Imagine a future where as soon as a needs analysis is done with the client, that client has a series of quotes and recommendations produced in real-time. All of a sudden, the market research aspect of insurance will vanish freeing up quite a bit of time. Instead, time with the client will be spent planning. It’s a different paradigm. In a future where every client can get products online, the value of accessing products for the client will vanish. Bionic advisors will become more knowledgeable because they won’t be learning about products and focusing on product sales. Technology will allow the transformation into financial quarterbacks by freeing up time. This free time will also allow bionic advisors to take on more clients. After all, think about how much more effective your business would be if you didn’t have to do almost any back office work, focusing instead  on one-on-one interactions with prospects and clients. 

The second major point of interest is that the future will give consumers access to purchasing all sorts of products. Similar to Quickbooks allowing business owners to do their own accounting, technology will allow consumers to do their own product purchase and planning.  From insurance to investments, we are seeing multiple players going direct to consumer. However, much like bookkeepers today, the bionic advisor will still be necessary for two main reasons. First, to save time – while clients may be able to get smart and use technology to create a financial plan, most won’t want to. Second, to help even knowledgeable clients get comfortable with their financial decisions. Like the bookkeeper, bionic advisors will create peace of mind for their clients. 

Overall, then, the bionic advisor will be in a great position. Technology will streamline the boring aspects of his or her job, allowing a larger book of business to be built. It will also allow the bionic advisor to compete with direct to consumer offerings.

How can financial advisors prepare today?

Moving forward, I believe financial advisors will need to know how to provide more holistic financial planning. If the bionic advisor becomes a financial quarterback instead of a gatekeeper to product, then it makes sense that advisors today should get more comfortable with holistic planning as opposed to just focusing on insurance and / or investments. As such, advisors today should invest in their education and obtain a CFP designation. This will give them the expertise to help clients through complex situations, understanding how it will affect the bigger picture. Some areas of the planning and purchasing process are likely to become fully automated which could actually be a good thing. Automation could free up time better spent as a client’s confidant. This free time will also allow advisors to work closer with clients, building better relationships and creating unique solutions for clients.”

Financial advisors should also spend time understanding the trends and changes that are upcoming. Talk to some millennials, spend time with some generation X’ers – understand what their struggles are and what they are going through. They will be your future clients. Understand how to service them and what they are looking for in an advisor. For one, these clients are demanding new technologies. They are used to the simple, beautiful interfaces of WealthSimple-esque platforms. They will want you to offer them a similar customer experience. Likewise, clients are going to become more demanding for different types of communication. This becomes especially important when trying to develop financial literacy. Getting your clients’ social media, sharing with them important articles over email, Twitter, or their preferred medium of communication will help keep them informed. Most won’t read long articles, but some will – especially if you give them a summary at the bottom (or a twitter summary). Social media can also keep you updated on big life changes they are facing.

Even in employee benefits, one of my major focus areas, you are seeing changes that offer opportunities for advisors today. The days of selling group benefits for a company and then leaving are definitely coming to an end. if your main value proposition for clients is shopping the market to find the cheapest price – watch out. Players like League and Zenefits are going to be producing more and more pressure on your bottom line.

So what can a benefits advisor do today? Well, for one, they need to stop trying to sell primarily on price. Instead, group benefits advisors should start taking a bigger role in helping businesses by working with their employees as well. Recently, the Financial Planning Standards Council did a national survey that showed the biggest source of worry and stress for 42% of Canadians is money. There’s no doubt this has an impact in the workplace, and advisors who are able to make the workplace healthier will provide a tangible impact to a company’s bottom line. The opportunity, then, is for benefits advisors to reduce that stress by working one-on-one with employees on their financial well-being. Make employees less terrified of their financial futures, and you will make them better, healthier employees.

Finally, advisors today should educate people on their vocations and why it’s important. The vast majority of people have heard the term financial planning, but don’t know exactly what it is. They are generally shocked when I tell them financial planning isn’t just about investing money and planning for retirement, but actually involves things like tax planning and financial management as well.  Ask people if they know how advisors provide value to the people they work with. Not in a salesy way, but by having an honest conversation and see where you can dispel myths and educate them. People want to know how much you care before they care about how much you know.