Future of the (Financial Advisory) Profession

Worth checking out a very interesting report from Bob Veres, financial industry analyst, entitled “Future of the Profession.”

bridgeAt over 100 pages, it’s a really in-depth look at the confluence of trends affecting the industry (brokers, financial planners and RIAs) and a critical look at where Veres thinks the market, business, and profession are headed.

The advisory firm of the future is undergoing a metamorphosis unlike anything that has been experienced in the 40-year history of the profession. This is not surprising, for there are more drivers and trends buffeting the financial services world than ever before: the aging and impending transition issues facing the founding generation of advisors; the market meltdown and business crisis faced by the profession; the advent of new software tools and an emerging dynamic that favors the development of a closer relationship between
custodians/broker-dealers and RIA firms; the democratization of practice management advice and information; the emergence and widespread adoption of new client services; the emergence of viable business models to address middle-market clients; the market trauma leading to a reexamination of how portfolios are created and tended.

Veres’s core thesis is:

  • not a narrow window of opportunity: there is a big opportunity for investment advisors to grow their businesses in the sea-change.
  • evolving from practice to business: practice management becomes more core as advisors focus more on profits and roll-up of advisory practices gains steam.
  • old models going away: Old-school brokerage business is in steep, terminal decline. Fiduciary is the future. This means that mid-market, less wealthy clients can seek service and receive it.
  • technology-enabled new business models: Technology is helping close the distance between custodians/broker-dealers and investment advisory firms as well as creating new business opportunities on different client sets.

All these trends seem to mutually enforce one another and there was a lot of thought and energy put into the report. Check it out.

Thanks Marie Swift. Check out her audio interview with Veres, as well, on the paper’s take-aways.