The pandemic has dramatically altered how financial advisors cultivate, communicate and work with clients. The changes promise to reshape the industry for generations to come.
Patti Brennan, Top RIA, Key Financial
Those insights were shared by Patti Brennan, co-chief executive officer of Key Financial, West Chester, Penn., and Joseph Coughlin, Ph.D., director of Massachusetts Institute of Technology AgeLab. John Diehl, who heads Hartford Funds’ Applied Insights Team, led a SHOOKtalks session with Brennan and Coughlin to find out how the pandemic is changing the financial advice business.
“What we are seeing out there is an acceleration of trends that are already under way,” said Coughlin. “One of the things we are finding is that technology is the new toilet paper. Everybody is buying it by the boatload.”
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Brennan, who is a top Forbes-SHOOK advisor, said she was surprised how quickly her clients shifted their communication habits. “If anyone told me a year ago that we would be in complete shutdown and that my clients, who tend to be on the older side, would be perfectly fine with getting on their computer and taking a Zoom call, I would have said, ‘nah, I am not sure our clients would like doing that.’”
Dr. Joseph Coughlin, Director, MIT AgeLab
“There has always been a mythology out there that older adults, typically those over age 50, don’t like technology,” Coughlin said. “The one thing COVID did is it pushed technology into our lives. It is not a novelty. COVID showed us that technology actually adds new value.”
“Since the beginning of the pandemic, our team has been called to do virtual events that are more frequent,” John added. “These events have even greater intimacy and fewer attendees than our live events prior to the crisis.”
The methods of communication have diversified but so has the level and intensity of the contact with advisors. “Any time there is a crisis, advisors get to a point where we have compassion fatigue,” said Brennan, a former intensive care unit nurse. “The patterns are similar to the ICU. We call it burnout.”
Face-to-face meetings will return gradually, Brennan said. The trend toward video conferencing has not hurt business, nor will it be leaving any time soon. “They can see me and I can see them. I share my screen. Is it perfect? No.” But video meetings have proven successful in garnering new business. “When I look at the close rate for new clients it has been incredible.”
Both Brennan and Coughlin said the pandemic has threatened clients’ livelihood, forcing many to re-examine careers, relationships and retirement. Clients are seeking advice in areas that extend beyond financial planning. The advisor-client relationship is quickly evolving into something more holistic, creating new demands for engagement.
Coughlin notes that MIT is studying the subject as part of a research project. “Advice is medicine, advice is accounting, it is how you buy your home. The business of advice is continuing to evolve and it’s going to become richer for fewer advisors who will do it better than ever before.”
One area financial advisors must grapple with: increased anxiety among younger clients when it comes to discussing job, life and retirement. “The younger you are, the more worried you are,” Coughlin said.
Brennan said her firm has always taken a holistic approach toward clients, a fact that might explain why Key boasts a 99% retention rate. “My message has always been that you are much more to me than your money,” Brennan said. “You are not a pie chart, you are family.”
To be sure, more handholding is unavoidable given recent trends. The paradigm has shifted and that is a good thing, Coughlin said. “The client now knows they can have conversations with you about more than their portfolio. The industry is really at a frontier where they can broaden their reach beyond planning, beyond finance, and start to own the entire lifespan and life experiences” of their clients.