Opportunity is knocking in new world of advice

Your business

The future is Planning + Advice + Technology = Success


The financial services industry is rapidly changing. Competitive and regulatory forces, combined with shifts in clients’ attitudes and expectations, have radically altered the business landscape for professionals. To navigate this new terrain, you need to be aware of the challenges—and the opportunities.

What’s driving the changes?

The key factors behind the new business environment for professionals include the following:

Competition – The playing field for financial advice has shifted remarkably in recent years. Today, the discount and online brokerages—including robo-advisors—have assets under management comparable to those of the big wirehouses. Clearly, many investors are attracted to the simplicity their platforms bring to fruition. Some investors look to the robo’s simply for their ultra-competitive fee structures. But recently many of these firms have succeeded by combining simplicity and low cost, with periodic human interactions.

More regulation and oversight – As an experienced financial professional, you understand the value of building trust and providing high quality investment recommendations and wealth management services. Consumers have come to expect financial professionals to place client interests ahead of their own.

Regulation Best Interest (Reg BI) – Requires brokers and their broker-dealers to demonstrate that they are acting in the best interests of their clients by meeting four standards of conduct. The rule makes clear that if you meet the four obligations described in the regulation, you will have satisfied the “best interest” requirement. These rules are tailored to the broker-dealer business model, without restricting certain types of business, and they integrate well with requirements of the Investment Advisors Act of 1940 for registered investment professionals who are dually registered.

Client expectations – Clients are not only demanding better fee transparency, they are also looking for additional products and services to help them attain their long-term goals. Clients are also becoming more aware of fee-based products and their benefits. They have been conditioned to ask their professionals if they are a “Fiduciary” which in a fee-based account they are. The fees in a fee-based account are very transparent, and a client can determine precisely what their fee will be on a quarterly and annual basis. All of these things, plus access to some of the world’s largest institutional money managers, is why more assets are moving to fee-based than ever before.

None of these developments should come as a surprise to you—in fact, professionals frequently cite at our workshops that these factors are leading many of them to adopt new technologies and move assets from a commission platform to fee-based/asset-priced models.

Many of these changes are having dramatic impacts on our industry, but they are not to fear, but rather something to embrace. Here are several ways to do just that:

Recognize the opportunities. The financial services industry will only continue to grow. With new products and services being offered every day, your opportunity to expand your offering to your clients and prospects grows as well. Given the sheer number of people who want, and need, financial advice your future has never been brighter.

Expand your target market. For many in our industry, the most “profitable” clients have been the wealthiest ones. But it is a mistake to ignore the “mass-affluent” market. This group, whose members maintain accounts between $100,000 and $1 million, have approximately $11.1 trillion in investable assets, which represents 35 percent of the entire financial services marketplace. And the lower end of the mass-affluent group (accounts under $250,000) has $2.6 trillion in market value. As professionals have pursued the high-end clients, the mass-affluent market may well be under-served—which means they are in need of services. 

Focus on planning, not products. To thrive in the coming years, you may need to consider your clients’ “big picture” more than ever before. When a financial professional engages in wealth planning with a client, it deepens the relationship, increases overall client satisfaction, improves client retention and increases share of wallet. Think about redefining yourself as an advice provider who can help clients prioritize their goals and choose the right solutions to meet those goals.

Take full advantage of technology. Our industry has made some big strides in technology the past few years, making it easier than ever for you to engage clients more deeply, offer a wider array of solutions, and provide advice and guidance through goals-based planning approach.

RBC Clearing & Custody offers sophisticated technology and tools, including our award-winning financial professional platform, RBC BLACK, which bundles together on one platform and integrates four wealth technology solutions.

Ultimately, technology can play a huge role in helping you provide much-needed advice to your clients—the ones you have today and the ones you’ll add tomorrow.

Be ready, willing and able to change. To compete in an increasingly competitive market, you will need to adjust your business model. This means, among other actions, you may have to do the following:

  • Be prepared for price transparency, and explicit price competition.
  • Develop new services and programs, like planning-based advice, to pre-empt investor switching.
  • Meet the digital requirements for the different investor segments.
  • Create service models that combine digital and human options.

How should you respond to change? By embracing it. There’s no doubt about it: The role of the financial professional is changing. A confluence of external and internal forces—competitive, regulatory, attitudinal and technological—is moving professionals from perceived “low-value” activities, such as investment selection, to “high-value” endeavors, particularly personalized, planning-oriented advice.

Concurrent with these forces is a huge increase in investable assets over the next several years.

Taken together, these factors point to a need for the type of advice and service you can offer. And RBC Clearing & Custody can provide you with the support and resources you need to succeed in the new world of financial services.

Related articles

Grow your business with liquidity strategies

Your business Read more
- Grow your business with liquidity strategies

How to help clients prepare for a financial emergency

Your business Read more
- How to help clients prepare for a financial emergency

Three ways to protect your business from cyberfraud

Your business Read more
- Three ways to protect your business from cyberfraud