This year has been defined by the unexpected and the unprecedented.

Due to the second-longest bull market on record, the S&P and other indexes hit all-time highs, performance is strong and account values are rising. But in a year where politics have been anything but usual, lawmakers continued to dominate the headlines as they postponed the fiduciary rule, locked horns on health care reform, and hit countless roadblocks on the path to overhauling tax law. Gridlock in Washington has become the new volatility.

In the face of 2017’s unprecedented opportunities and challenges, advisors have also felt the pressure of three converging forces — and their impact will be heightened in the year ahead.

It starts with the commoditization of financial advice, best exemplified by the growing use of robo advice by both financial advisors and do-it-yourself investors. Second, the downward pressure of fee compression, as consumers demand high-value and low-cost products and services. And third, the continuing consolidation that is reshaping the advisor industry, as firms join forces to achieve greater scale and gain a competitive edge.

In 2018, the impact of commoditization, fee compression and consolidation will lead to a massive shift, shaping the products you use, the portfolios you build, and the very nature of financial advice itself. To transform your practice, grow your firm, and build more wealth for your clients, stay focused on three trends in the year ahead — the competitive advantage of customer experience, the power of platform innovation and the artificial intelligence revolution.

To drive greater growth and enhance profitability, the customer experience is a key competitive advantage. According to our third annual Advisor Authority study of roughly 1,600 RIAs, fee-based advisors and individual investors nationwide, more than 90% of advisors — including the most successful who earn more and manage more AUM — say the customer experience is important to their firm’s value proposition. And nearly 90% agree that the customer experience will become increasingly important for attracting and retaining clients in the future.

Quote
In 2018, the impact of commoditization, fee compression and consolidation will lead to a massive shift, shaping the products you use, the portfolios you build and the very nature of financial advice itself.

Customer experience is the DNA of the advisor/investor relationship, fundamental for the strength and health of a profitable practice. Defined as the way an advisor and investor interact at all points in their relationship, the customer experience encompasses every tech-centric touchpoint, from your website, client portal and mobile app, to the emails and text messages you send, the blogs and e-newsletters you post, even your statements and performance reports. These elements must be consistent, they must convey your firm’s unique character, and most importantly, your commitment to put clients first.

Our research also shows that even as technology is key to the customer experience, it’s no substitute for the human touch. Both advisors and investors agree that a personal one-on-one relationship and quality of communication are the top two factors for success. When it comes to communication, both say that nothing can replace face-to-face. To make the relationship work, both agree that trust must come first. And investor say that when choosing an advisor, experience, holistic planning and a fiduciary standard outrank all other factors by a wide margin.

The most successful advisors invest more in technology — and use twice as much technology — when compared to the typical advisor, according to our study. These tech-enabled advisors leverage technology to enhance every aspect of their job — from advising and planning, to investing and risk management, to managing their practice.

In 2018, the most important innovations in fintech will be less about a single product — and more about integrated platforms. Platform innovation has the power to transform every aspect of your practice, creating a more seamless customer experience on the front end, greater efficiencies on the back end, and a more unified, holistic approach to planning. Integrated platforms allow you to consolidate data from multiple sources into a single portal, to monitor changes across different markets, manage across different account types, and optimize allocations across different types of products. At the same time, these platforms can help to meet your clients’ best interests, by providing greater transparency, lower costs and more choice.

Ultimately, platform innovations can help you can serve clients more efficiently and more profitably at every stage of the relationship and every touchpoint of the customer experience, to help them achieve and exceed their goals — as well as your own.

Quote
In 2018, the most important innovations in fintech will be less about a single product — and more about integrated platforms.

Artificial Intelligence is now on the verge of revolutionizing the way that advisors use technology to gain insights into their clients’ behavior and most important needs— and gain a competitive edge over the competition. The most successful advisors are twice as likely as all other advisors to use AI or data analytics to understand client behavior according to this year’s Advisor Authority report.

AI can quickly assess and organize complex information and disaggregated data from disparate sources, performing tasks such as analysis, reasoning and decision making, with enhanced accuracy, capacity, and speed. As robust cloud computing, customizable CRMs and intelligent reporting tools have become table stakes, even for the smallest practice, AI is the latest wave of technology to become more affordable, more accessible and more manageable.

Adopting AI can help you build a closer connection with your clients, enhance the advisor/client relationship, and help you predict those critical moments when they need your guidance the most. It allows you to create the most competitive customer experience, by taking holistic planning, customized solutions, and individualized white glove service to an even higher level. Likewise, AI can help you leverage what you’ve learned about current clients to make more informed decisions around marketing and prospecting, to attract and retain new clients — essential for any firm to drive greater growth.

In the year ahead, larger firms are poised to continue driving down costs and achieving greater scale. This will pressure advisors of all sizes and every level to re-engineer their practice in an effort to compete. The race is on.

Mitchell H. Caplan

Mitchell H. Caplan

Mitchell H. Caplan is CEO of Jefferson National, now operating as Nationwide’s advisory solutions business.
Craig Hawley

Craig Hawley

Craig Hawley is general counsel and secretary at Jefferson National, now operating as Nationwide’s advisory solutions business.