Mark Copeland
Signature Estate & Investment Advisors LLC
Senior Partner
Technology advancements will provide tools available to advisers and individuals to execute basic financial management strategies, such as portfolio rebalancing, portfolio model building, and tax efficiency recommendations. The Millennial and coming generations will implement these “robo adviser” tools to manage their own assets efficiently and effectively, reducing the need for a large number of advisers in the midwealth to moderate income levels.
High-net-worth individuals will continue to seek expertise in a broad range of financial matters and will view their time as more valuable (and therefore less inclined to do it themselves). They will seek assistance in remaining rational and not emotional in volatile financial times.
Their desire will be for custom asset strategies designed to meet their personal objectives. They will want a firm or individual to be their “point person,” assisting them in many financial tasks, from portfolio management, to risk management, and all areas of financial planning.
Compensation for services will continue to be fee-based, but there will continue to be fee pressure from competition in these areas, and there must be value added for advisers to maintain their strength of relationship with clients. The wealth management industry will continue to struggle with aging advisers as the “entry” level clients will be tough to find. Due to technology advancement and automation, there will be a smaller number advisers expected to provide more services and expertise to a larger number of clients.
As a fee-based independent financial planning and investment management firm, we are well-positioned to address the changes in the wealth management industry, but we will need to stay current.
Our focus will be to improve our information technology to automate the portfolio-rebalancing and tax-efficiency process to serve more clients efficiently, along with improving reporting capacity to highlight where we are adding value.
We believe that portfolio managers, planners, associate advisers, and client concierges should have direct contact with clients to add service, value, and performance to the client experience. The focus is on client retention first and then client acquisition.
This “team adviser” approach provides a natural avenue for us to add young, talented advisers into our organization for added service to clients and ultimately the next generation of our firm.
Stewart Darrell
Delphi Private Advisors
Managing Director
There are three main changes that will likely shape the wealth management industry over the coming years. The first is the progression toward a client-centric service platform that merges technology with traditional client/adviser relationships. At the high-net-worth end of the spectrum, new technologies will enhance communication and collaboration between clients and their advisers, leading to a more dynamic and satisfying overall experience for the investor. At the lower end of the net-worth spectrum, online solutions and computer-driven algorithmic investment models will challenge traditional service models. While this has the potential to redefine the investment experience for smaller investors, it will have a lesser effect on the high-net-worth segment, which will continue to demand highly customized and personalized investment solutions. At Delphi Private Advisors, we strive to integrate leading-edge technology into a high-touch service model.
Consolidation is another factor that is altering the wealth management landscape. Over the last two decades, there has been an exodus of investment talent from brokerage firms to independent registered investment advisers (RIAs). These pioneers are now aging and looking to retire.
Some will merge their practices with like-minded firms that will continue to serve these clients in the manner to which they have become accustomed. Others will join investment firm aggregators assembled primarily to leverage economies of scale through size. We believe consolidation will create opportunities for our firm as investors reassess and seek out firms that will best serve their interests. Delphi is particularly well-positioned to serve clients who value a personalized, collaborative approach within a boutique environment.
Finally, the role of liquid alternatives will continue to be debated over the coming years. Alternatives generally refer to investment strategies other than traditional stocks and bonds. They often utilize leverage and derivatives across the equity, fixed-income, currency and commodity markets. Historically, such strategies have been reserved for accredited investors within private partnerships. More recently, firms have packaged alternative strategies into publicly traded mutual funds and marketed them to the masses. This relatively new frontier underscores the importance of working with an experienced adviser who understands the increasingly complex investment landscape.
Alli Hillgren
Beacon Pointe Advisors
Vice President of Marketing and Communications
We all wish we had crystal balls to tell us what the future holds, but the reality is we don’t. At Beacon Pointe Advisors, we know that the wealth management industry is changing exponentially and that the past 10 years in the industry will not be a reflection of the next 10. There are three main concepts we think will potentially modify the wealth management space in the years to come. Advancements in technology and the robo-adviser landscape; a large increase in intergenerational wealth transfers; and the delivery of financial information in a more casual, accessible and mainstream manner.
So how will these changes affect the operations of our firm? At Beacon Pointe, we look at change and challenges as opportunities, not threats to our business.
With an estimated $30 trillion in assets expected to transfer generations over the next 30 to 40 years, finance has become a family matter. We recognize this and strive to engage multigenerations in our annual financial planning meetings. This is part of our continued passion for “educating, engaging and empowering” people in their financial lives. We will continue to engage families about their finances to gain the trust of and build relationships with future generations.
Technology and the concept of robo-advisers excites us. This provides us with opportunities to further explore and expand our approaches to client care and continue to tailor the customer experience and relationship our clients want with their investment advisory team. Robo-advisers also provide a platform for opportunities to expand on our passion of financial literacy and establish relationships with younger clients who wouldn’t necessarily be able to invest with our firm at our regular account minimums. The robo-adviser concept also speaks to the general shift towards an increase in “casualness” of personal finance, meaning that finance and investments are becoming less of a taboo topic among the younger generations. The client is getting savvier by the moment and starting to do so at a younger age.
Our firm plans to embrace these technological and deliverable changes. As clients continue to grow and evolve, our firm plans to grow and evolve with them.
Andi Kang
Crown Wealth Management
President
There are three changes to the wealth management industry that our firm believes are coming to our industry: a more expansive view of wealth; robust technology; and the application of the fiduciary standard.
We are passionate about a more expansive view of “wealth.” Wealth management
should not be solely about investing or money. We believe that true family wealth also encompasses family values, the intrinsic talents each member has, the legacies of wisdom that get passed down from one generation to the next, the way a family engages society and our stewardship of all of our resources. A wealth management company should assist in educating how to build all the forms of wealth and how to keep those values and lessons in the family from one generation to the next.
Secondly, technology has made investment planning more efficient with strategies that make use of professional money managers and bundled accounts. Customized portfolios and streamlined processes have helped clients potentially have a more dynamic and responsive portfolio. What used to take dozens of phone calls to clients, time lag waiting for responses, and more lag inputting multiple trades can now be accomplished in a structured way that can be almost real time. The investment management process has become much more transparent than in years past, and investors have access to research, transactions, performance and fees at their fingertips.
Thirdly, there are two competing standards that advisers or brokers—which are two different roles—must adhere to: the fiduciary standard versus the suitability rule. Knowing the difference can be very important for clients receiving the advice. Investment advisers are required to work by the fiduciary standard, whereby the adviser is required to put the client’s interest above their own. It also means the wealth manager is making sure the advice uses accurate, complete information, the analysis is thorough and avoids conflicts of interest. Registered representatives who work for a broker/dealer are required to follow the suitability rule, where recommendations are reasonable to the clients’ financial situation and objectives. It is our opinion that the fiduciary standard is the more stringent standard, and we believe and hope that wealth management will continue to move toward fully embracing the fiduciary standard.
We at Crown Wealth Management have been applying and growing with these changes in wealth management. Our calling card is a comprehensive view of wealth. Using streamlined processes with disciplined technology and leading academic research helps us efficiently deliver timely financial advice, and working within the fiduciary standard helps us focus on the best interests of the clients we serve.
Ethan Morgan
J.P. Morgan Private Bank
Managing Director Orange County & San Diego
Going forward, we definitely anticipate continued change in our space. There will be more players entering the wealth management marketplace, both on a macro and local level. The positive is that this creates greater optionality for clients, but it can also cause greater confusion regarding best fit. At the same time, as risk and uncertainty in the markets extend, easy returns in risk-centric asset classes will fade, compelling clients to seek more professional investment advice. For our firm, this means that as the investment world becomes increasingly complicated, we must focus on helping our clients, as well as those entertaining new relationships with us, by getting out in front of them and sharing our insights regarding holistic wealth management and successful navigation of this cycle’s next phase.
On a local level specifically, having just achieved critical mass as a team, we are just scratching the surface in providing advice to Orange County’s successful families. Interestingly, at the same time, we are seeing an intersection of events occur here locally. All in concert, we are seeing Orange County come of age as a wealth center, just as we enter the cycle’s next phase of uncertainty and volatility in risk markets, while our industry expands and fragments. Fortunately, over the last couple of years, we’ve been focused on building a strong presence in Orange County, so the timing of our arrival has been ideal. As the climate of uncertainty builds in financial markets, we are uniquely—and fortuitously—positioned to bring J.P. Morgan’s global capabilities and unparalleled insights to our local community, helping fulfill our clients’ visions.
This said, while we anticipate these dynamics over the coming years, investments will always be core to the balance sheets—and thereby the future—of our clients. Over time, we fully expect the fragmentation of our industry to highlight the value that J.P. Morgan Private Bank’s holistic wealth planning insights and investment advice can offer clients—along with a level of service that has set our firm apart for nearly 200 years.
Winnie Sun
Sun Group Wealth Partners
Managing Director, Founding Partner
One of the most welcome changes that we foresee in the wealth management industry is increased communication and transparency. With the Google generation, our clients want to better understand what we do, how we plan for them, and how they can stay engaged and collaborative with us. The adviser who stays an arm’s length away should be avoided. Our clients want to feel engaged and know that they can reach us whenever and through whatever method they choose. We love that email and social media platforms like LinkedIn and Facebook allow us to keep connected with our clients in a meaningful way. I believe for us, as advisers, it’s paramount to stay relevant, embrace social media and nascent technologies. Our treasured clients deserve nothing less.
Mark Van Mourick
Optivest Inc.
Chief Executive
I anticipate a continued “hourglass effect” (much like our current economy) where those with significant assets enjoy high appreciation, while those receiving government entitlements are at all-time highs in numbers and amounts. However, the middle class gets squeezed and receives neither, like an hourglass.
In money management, the same dynamics are taking place. The largest accounts are receiving more value and attention, the small accounts are taking advantage of low-cost online robo-advisers, but the middle-class family with $50,000 to $250,000 of investable assets and that needs personal advice will have a hard time finding good counsel. I just met with a large bank adviser who shared that he does not receive any compensation on accounts under $250,000.
Specifically at Optivest, we continue to offer premium services to the larger clients and have added advisers and planning tools to help with the needs of middle-class investors.
