Lack of advisors

In the United States today, we have only one financial professional for every 1,000 citizens. And, we have the largest generations of Americans leaving the workforce for retirement, relying on the assets they’ve have saved for the rest of their lives. No way can a single professional provide the necessary advice to 1,000 people, especially with a low-interest environment, unstable global economy and the most complex tax code in history. We must develop a better system to recruit, invest in and train new professionals in our industry.

Commoditization of technology

Technology can do great things for our industry, but it can also do some damage if we aren’t careful. In his book “End of Jobs,” Taylor Pearson discusses how just a little over a decade ago, Loudcloud, an early cloud hosting service, hosted applications for $150,000 a month. Today, those same hosting services cost $1,500 a month. With today’s appeal of therobo-advisor, I expect the same revenue compression over the next decade in our industry.

Our current climate is to look for the least expensive way to provide a service instead of providing a service with the most value. Asset allocation can be found everywhere; however, managing the sequence of returns makes all the difference in whether a client runs out of money. We must redefine ourselves from asset managers to client-focused advisors — and customize it with scale.

Changes in income

Pearson also points out that the American population faces a major shift in income generation — and he’s not referencing the loss of earned income by voluntary retirement. Instead, more Americans will turn to entrepreneurial opportunities in the future. Because between 1948 and 2000, jobs grew 1.7 times faster than our population — since the turn of the century, however, our population has grown 2.4 times faster than jobs. Without the retirement plans of “normal” employment, we must help our clients find vehicles to meet long-term savings demands and educate them on the impact of self-employment versus paid wages. Our clients started the mind shift, so our industry must adapt to keep up.