Advisors do not have to defend their fees because they provide services that are invaluable, especially compared to historical norms, Nally said during an interview on Friday.
“The scope of services has expanded but the fees have remained largely the same,” he said. “Advisor used to mean an investment manager who helped with investment selection, now advisors offer that and holistic financial planning, including help with estate planning, college planning and more.”
With the rise of online advisory firms, advisors will need to clearly communicate their value to clients, said Skip Schweiss, TD Ameritrade’s managing director of Advisor Advocacy.
“It’s not about defending their fees, it’s more about articulating their value to clients, making sure they understand all of the services the advisor provides," he said.
Schwiess added that, in many ways, some of the online financial planning, investment and money management services available online may end up being used by advisors to supplement the planning they do. “These types of things may actually be seen more as a tool for advisors, than as a competitor.”
Beyond those industry changes, a major demographic shift is underway making it essential for advisors to figure out how to communicate and engage both the next generation of advisors and clients. Many advisors are looking for ways to reach out to younger, less wealthy potential clients now.
“Don’t wait until [potential clients] achieve a certain level of wealth where they’ll need professional financial planning,” Nally said. “Advisors need to be in the front of their minds now.”
Social media is yet another way advisors are responding to changing demographics and preferences and making the most of new technology. It represents both an opportunity and a challenge for many advisors.
Younger generations seem more apt to communicate via their mobile devices, whether it’s texting, social media or email on their phones, and advisors need to adapt to that preference, Nally said.
“The idea that social media is all about marketing is a myth and advisors are starting to realize that," he said.
As such, social media will be another area of focus at the upcoming TD Ameritrade conference. Social media labs will be available to help advisors learn how best to use this new tool to communicate with clients. In an increasingly digital and social time, where studies have shown that people trust peer recommendations over advertising and marketing.
“Advisors need to embrace social media as another communication channel,” Nally said.
