Financial Services

Halfway up the Mountain: The Ascent of the Wealth Management Experience

The Wealth Management industry has made great progress over the last decade. It was not long ago when pitching stocks to strangers over the phone was the norm. Now, a combination of increased expectations on the part of consumers, regulators and the industry itself have propelled wealth management to new heights where client-centric and comprehensive advice has become a business fundamental.

While this growth is a significant accomplishment, the industry still has a long way to go before it reaches peak customer centricity. To borrow a mountain climbing analogy, the industry has reached base camp at Mount Everest. That’s nothing to scoff at. It is a multi-week venture that starts in Nepal, requires a flight from Katmandu across the Himalayans to a small moun­­­tain airstrip in Lukla and then a weeklong trek beginning at an elevation of 9,000 ft and 60 miles later ending at over 17,000 ft. All along the way you experience a majestic backdrop of four of the highest mountains in the world, the skill and hospitality of the renowned Sherpa’s, narrow winding trails and the acclimatization to oxygen levels 50% of that at sea level. Many say this is a bucket list trip for the mountain adventurer.

Yet is still only halfway up the mountain.

Research shows that the wealth management industry is also only halfway up the mountain. Despite great progress, the J.D. Power 2021 U.S. Full Service Investor Satisfaction Study found that more than half of clients (56%) said their advisor did not provide all the products and services needed to address all their wealth management needs, a third (33%) said that their advisor did not understand their financial goals/needs and used terms they didn’t understand, 53% said they did not completely understand the fees being charged.

There is a gap between where the industry is and its full potential.

Is this ok? Is halfway up the mountain or the Latin translation, mediocris, an acceptable destination? I think industry leaders would agree that the answer is a resounding no.

What we do as an industry is too important. The impact of good financial advice is too profound. The ripple effect is too pronounced.

Good financial advice can change lives. Good decisions and planning today can markedly affect an individual’s future and that of their family, community and even society at large. Making good financial decisions gives a person the power and control to affect their future and good financial planning provides clarity on how to get there. The value of this cannot be overstated.

The effect one can have on many is extensive, our ripple effect goes far and wide. It’s been said that an individual, on average, will know 1,000 people in their lifetime. This means that an individual is only one person removed from 1,000,000 people. And when you influence someone you not only influence that person today you influence the “collective” person. The community made up of that person today and who they are in all their future iterations. The effect of our willingness to strive beyond ok is quite profound and almost beyond comprehension. What we do matters and often more than we realize.

We know as an industry that we need to keep climbing and as the research shows there are specific areas of improvement where we need to train our focus:

  1. Embracing an unwavering commitment to the client and fiduciary responsibility. This is good for everyone, the client, the financial advisor’s success and all those that support them.
  2. Adopting a true advisory process. There is a place for selling, but the day-to-day role with clients must be to advise. To help clients make decisions that align with their values, goals and aspirations and to help them act on those decisions.
  3. Gaining a deep understanding of the client’s life and what is most important to them. Adopt the practice of inquiry to help uncover the truth, both the knowns and unknowns, about a client’s values, goals and aspirations.
  4. Delivering comprehensive advice.  Address the entirety of client wealth management and financial planning needs. Incorporate the expertise needed to accomplish this through teaming and strategic partnerships.
  5. Leverage technology to provide anytime anywhere access to information and to model the future. Provide the ability to explore multiple paths and future possible outcomes.
  6. Creating unmistakable and remarkable value. Leave no doubt as to the profound impact financial advice, and all the expertise that goes into it, has on a client’s wellbeing. Today and in the future.

The wealth management industry has made real and significant progress in serving clients, transitioning over years from a transactional commission-based culture to one that values and supports more comprehensive client-centric fee-based client relationships. That is long trek from where the industry started, but we’re not at the summit.

No one in the industry aspires to be mediocris yet one can be lulled into accepting the status quo. The long trek to base camp is a significant accomplishment yet there is still further to go.

And the last and pivotal part of the journey is often the hardest part.

For the well-trained and experienced mountaineer, reaching the peak of Mt. Everest is a pursuit worthy of the time, sacrifice, energy and expense needed to realize the goal. The same can be said for the wealth management industry and the effort, time and resources needed to realize the full potential. Halfway or mediocris is not acceptable. Striving beyond halfway takes real intention and continual effort.  

So where are you on the journey? What are your opportunities to impact the financial advice value chain and improve the client experience and their outcomes? How can you change the pace or trajectory of the ascent to the peak?

Remember what you do can make a big difference.