Professional service industries tend to evolve over time as the regulatory environment evolves and new technologies emerge. For instance, the financial advice industry has seen many changes to regulations (for both advisors and their clients), advisor business models, and the advisor technology landscape. These changes all have the potential to change the industry by shifting the current focus on selling financial products (including financial plans themselves) to providing a more in-depth and personalized experience that helps anticipate future issues in a client’s life and better help them identify the goals that will help them thrive. And the wide scope of technology tools supporting advisors to shift into providing more client-centric services makes this new era in the future of financial advice possible!
The changing patterns in how financial advice is delivered can be compared to the similar trends seen in the evolution of medicine. Dr. Peter Attia, author of the book Outlive: The Science & Art of Longevity, describes the trajectory of medicine in 3 stages: Medicine 1.0 represents the time in history when healers believed that illness was attributed mainly to supernatural forces, Medicine 2.0 represents our current state of healthcare, in which genetic makeup and the environment play a major role in illness and disease, and where the focus of doctors lies primarily on the administration of treatments to cure and mitigate human ailments; and Medicine 3.0 is the projected future direction of medical care, where, instead of taking a reactive approach to disease and illness, healthcare practitioners instead invest more energy focusing on preventing illness and maintaining good health in the first place through more personalized plans for patients.
In the context of the financial planning industry, whereas Financial Advice 1.0 and 2.0 represent our past and present industry’s reactive focus on coming up with solutions to address client problems, Financial Advice 3.0 offers an optimistic future glimpse of financial planning where advisors offer deeply tailored planning experiences, pairing human advice with digital service and support to fully engage clients in a more proactive approach to financial planning. Specifically, Financial Advice 3.0 improves on the previous iterations of planning by involving a more thorough technical analysis of a client’s unique situation than it did before and drilling deeper to reveal more planning opportunities to present to clients.
Furthermore, with the efficiencies built-in to emerging technology (ranging from tax planning software that helps with the tactical aspects of executing tax planning strategies, to estate planning software that helps clients better understand their estate plan, to specialized planning software that lets advisors go deeper into various planning areas important to their clients, and even to advice engagement software that engages clients with the advice provided), advisors can focus more of their time on enhancing the ‘softer’ side of providing advice to clients and not just implementing a relatively static financial plan. And by building more empathetic relationships and having deeper conversations with clients, advisors who implement Financial Advice 3.0 build the trust needed to fully understand the client’s unique situation and concerns while creating a highly engaging client experience.
Ultimately, the key point is that financial advisors have new technologies and approaches that increasingly support a shift into a more proactive, interactive, and dynamically engaging version of planning for clients – Financial Advice 3.0. This approach comes with a new generation of tools and resources that allow advisors to focus on building stronger client relationships and providing clients with a more meaningful planning experience. Which could lead not only to better planning outcomes for clients, but also to new opportunities for advisors to grow their firms!
