New York I December 17, 2020

The Five Big Trends of 2021

Nothing will ever be the same - but it could be better

by Steve Gresham

Next Chapter, a leadership initiative created by the Money Management Institute, Financial Advisor magazine, and The Execution Project, LLC, has named the initial members of its Advisory Council, the operating group that will drive the effort to improve results for clients approaching and experiencing their retirement years.


The good news is that this year is unlikely to be worse than 2020. But as noted by The Economist, “21” is the total count of faces on a die. So it might just depend on how you roll. 


The world history of significant traumatic events - wars and pandemics - is encouraging for entrepreneurs and business leaders able to adapt to the aftermath. With one important caveat - do not wait for anything to “return to normal”. Nothing will ever be the same again so best we embrace the future and help shape it for our family, friends, colleagues and clients. Easier said than done to be sure but consider this list I collected from my virtual travels around the industry. Please think carefully as you scan – there is a significant difference between being aware of these opportunities and taking action.


1. Asset Consolidation – Winner or Loser?


$32 trillion is currently splashed across countless custodians, products and advisory firms. The typical HNW household has 5-6 providers, each of whom calls that household “our client”. But the average advisor holds only about 50% of the average client’s investable assets – and nearly half of these investors say they don’t have an advisor. $12.7 trillion is held by people 55+ who are still working. This is truly “money in motion” – and most of its owners will consolidate their assets in the next ten years. Will they stay or will they go?? Where and why?? Keep reading….


2. “Health” is Here to Stay – Make Room

COVID-19 shocked the world. Everyone is now alerted to the risks of health. But health was already the #1 concern of people 55+, who now control more than 80% of all advice industry profits (through 2035). Top advisors include health in their conversations with clients. You don’t have to be a doctor, but you do need to probe clients and capture their preferences about where they want to live, how they plan to pay for and receive health care – and who you need to contact in the event they are disabled. 1 in 4 of our clients aged 65+ is currently suffering a level of cognitive incapacity that prevents them from making good decisions. If you don’t engage, the family will take the money away. BTW – that’s the newly crowned #1 reason top clients leave their advisors – they either die or become disabled. What can you do?? Keep reading….


3. Sell Security Alongside Opportunity


Investors have never had it so good. Nearly 12 years of equity markets jamming at 18% per year – and bonds at 11%. No wonder client appreciation of advisors is high. But watch out – clients on the cusp of retirement or already out there remember 2000 and 2008. The antidote for insecurity is security. The #1 product concept of interest to clients who already work with advisors is retirement income. Not the stock market. Prediction: if you are not discussing protected lifetime income with clients, you are vulnerable to competitors selling safety. Do not assume clients can estimate a retirement paycheck from a portfolio. There are protection products that leverage client assets for legacy (life insurance), health care costs (long-term care) and longevity protection (DIA, SPIA, et al). Retirement is not just about assets – it’s about managing liabilities as well. Most clients don’t have enough assets to get all the way through retirement. They need leverage. And yes, that means adding products to your arsenal, increasing the breadth of your services. How to keep track of all that complexity? Keep reading…


4. Stop Fighting Automation

Industry research indicates only about half of advisors actively utilize CRM – the most basic digital capability. Post-It notes and Excel spreadsheets stubbornly hold their ground as the go-to client engagement tools. To get an idea of how much lift you can get from better engagement with clients, try a very simple exercise we used in launching Merrill Lynch Private Wealth twenty years ago. List the services you provide clients – asset allocation, investment management, etc. Make sure the services named so far in this column are included. Health care costs, retirement income, legacy planning. Now review just your top twenty client households. How many of the households own all of the services you offer? Even the average top advisor shows significant slippage around #15-20, so don’t feel bad. But imagine the gains – and the client retention/referrals – if you could extend your reach per household. That’s the payoff for everything here. But you’ll have to be automated to pull it off.


5. Commit to Your Personal Objective

Smart FinTech leader, Tom Moysak said recently that the decisions we make in the next five years are the most important we will even make. Wow. Given the average age of financial advisors is 55, what’s your plan? Be brutally candid with yourself about your immediate course of action. If you truly want growth, you won’t find a better time to compete against advisors who will ignore the forces listed above. If you want out, you won’t likely find a better time to sell. No matter what, don’t get caught with one foot on the dock and one foot in the boat. Commit. The key is to embrace a new third dimension of success available to advisors with the energy to get onboard that boat – full adoption. Think of this phenomenon in the context of your mobile phone: first, brilliant inventive innovation created the phone itself, you then invested personally in the idea enough to buy one. But you miss out on the incredible benefits of entertainment and productivity if you use your phone only to make calls or read emails and texts. The entire FinTech world wonders aloud every day why advisors work harder than they need to. And something like 75-80% of advice industry clients wonder why no one seems interested in the worries they have about health care and outliving their money. So much of the reward ahead is based on more thorough execution – fully capturing the potential. Not on some digital silver bullet.  Don’t leave wins on the field – adoption is the new innovation.


Steve Gresham is a consultant to the wealth management industry through his firm, The Execution Project and managing partner of industry initiative, Next Chapter. Formerly executive vice president and head of the Private Client Group at Fidelity Investments, he is also senior education advisor to the Alliance for Lifetime Income and author of The New Advisor for Life (Wiley).