How the business of giving advice is about to change forever
The old established world of the trusted advisor ended in April 2020. I was there to watch it happen.
It was three days after the unveiling of the Paycheck Protection Program (PPP), the federal government’s plan to give businesses with fewer than 500 employees a forgivable loan to cover up to eight weeks of payroll costs.
At 9:30 that night, I had just finished my third virtual CEO roundtable of the day. As CEOs of small businesses—I run an innovation consultancy—we had been invited to hear from an A-list roster of bank presidents, lawyers and accountants. All of them took endless questions from my fellow company owners desperate to understand the PPP and its implications for our businesses. Like me, many of my peers were facing an existential crisis: If they didn’t get the money quickly, they would be out of business.
Everyone was frustrated by what they heard—or to be accurate, by what they didn’t hear—on those calls. Despite being designated as trusted advisors, the people who get paid to guide you through life’s most important decisions (i.e., the bank presidents, lawyers and accountants) did not have the answers. They had no specific understanding of how the program would ultimately work. I felt sorry for them. It is embarrassing to be trusted and not have any relevant advice or connections.
So predictably, the CEOs on the calls moved from Plan A to Plan D. They began to search for the maverick problem-solvers—people who knew how to beat the system. As soon as my fellow CEOs got off the Zoom calls, we began dialing one another. Somebody had to know someone who had already figured this out, and together we were going to find him or her. As soon as this person was found, we agreed to share the connection and learning with each other.
Some 60 percent of small business owners applied for a PPP loan during round one of the program; however, only 5 percent received funding.
But every one of us who were frustrated by the trusted advisors we consulted and decided to take a different path got our money in round one. That was weeks ahead of those who had to wait for round two. In an economic crisis, that kind of lead is huge.
We got our money because someone in our network “knew a guy” with the answers. In the end, I wound up securing our PPP loan with the help of a community bank after they told me that they didn’t even process SBA loans directly. Why? Because I trusted the CEO and did not buy into the unauthentic assurances I heard from the executives at other big brand banks.
“The future is already here—it’s just not very evenly distributed.” —William Gibson
Who do you call when you need advice? This question used to result in predictable responses depending on the topic at hand. For example, our financial advisors took on our personal finance questions, while our doctors got the call when someone wasn’t feeling well.
But our relationship with trust has changed—dramatically. Think about the last time you were curious about an investment idea, for example. You’ll probably recall that it wasn’t your financial advisor who got the first call. Instead, like most of us, you relied on an expert whose job description did not include the words “trusted advisor” but rather had earned your trust or the trust of a respected associate.
It’s The End Of The World As We Know It
In the past, we had to take the word of friends and associates when looking for an expert for advice. But what happens when you know who you CAN trust? We are about to find out.
We are in the middle of a worldwide trust recalibration that is changing the way we receive and believe information. According to the research firm Ipsos Global Trustworthiness Index, the professionals who report our news and form our policies are at the bottom of the list when it comes to trust. We are 14% more likely to trust an everyday person than a TV or news professional.
And when you look at the graphic above, it’s a small wonder that people feel comfortable challenging noted experts with arguments that include “I know a guy who thinks differently” for everything from politics to science to medicine and money.
Our company, Maddock Douglas, is in the business of creating relevant, new products, services and business models. To do this, we research emerging trends and consumer needs on behalf of clients who want to stay a few steps ahead of the ever-changing desires of their customers. Our clients have gotten paid trillions of dollars to deliver professional guidance to their customers. Most of these clients consider themselves trusted advisors and have the credentials, brands, marketing budgets, lofty commissions and country club memberships to prove it. So we have a dog in this fight. We need to be experts in the trusted advisor business to serve our clients well.
So we conducted a comprehensive research study about the future of trusted advisors. It culminated using a prediction market study—the best way to capture the wisdom of the crowd. In it, we asked 51 expert advisors and nearly 1,000 consumers to help us predict the future.
Here’s one small example of a question we asked:
In the year 2023, what percent of consumers will follow nonprofessional, noncelebrity influencers who do their own extensive research as their primary source of advice before making important financial decisions (such as what stocks to invest in, which insurance products are best, or when to purchase or sell a home)?
The answer? The crowd says that 70% of consumers will follow nonprofessional influencers who have done their own research before making important financial decisions. Professional advisors are even more bullish on this prediction at 89%, and millennials agree with an 87% prediction rate.
One thing is very clear: It is time to think differently if you call yourself a trusted advisor. Today, access to information and social networks is creating more and more professional consumers. These “prosumers” can quickly find unbiased, unpaid and unflappable peers for their answers.
If you own or manage an advisory service, it’s time to build a strategy to deal with this emerging behavior.