Advisors Should Embrace the Industry's Disruptors
Major disruptions to the financial-advice industry are happening at a quicker pace, but advisors needn’t fear them, Jamie Price writes in WealthManagement.com.
The advice industry has seen several “inflection points” in the past four decades that killed off some firms but made others thrive, according to Price, president and CEO of Advisor Group. Many firms weren’t able to keep up with paradigm shifts such as the abolishment of fixed-rate commissions and the launch of discount brokerages, the birth of the RIA as well as broker-dealer models, online trading and, more recently, robo-advisors, he writes.
But many firms survived, and some were able to capitalize on these changes to grow even faster, according to Price. The key, he writes, is to view the inevitable changes as opportunities. The Department of Labor’s fiduciary rule, which requires brokers to put clients' interests first, is but the latest example of a significant disruption to the advice industry, according to Price.
Regardless of the ultimate fate of the rule, which currently faces the threat of repeal, some firms have already changed tack while others sold rather than see what happens, he writes. But a few wealth management companies will only get better at what they do as a result of the changes to the industry, he writes.
As per Moore’s Law — the theory that technological innovation is constantly accelerated — tech-driven changes to the advice industry are coming faster, he writes. The DOL rule isn’t going to do away with commissions, but fee-based business will continue to advance, driven in part by the robo-advisor revolution, according to Price.
And the next big event will involve technology as well -- namely, big data and artificial intelligence, according to Price. The true fiduciaries among advice firms — the ones that focus on helping clients and take on challenges as chances for improvement — will continue to grow regardless, he writes.