14 FORUM SEPTEMBER 2019

INDUSTRY

Changes

Advisors need to face the reality of business disruptions. Wayne Miller shows you how to come out strong on the other side

AreComing

SEPTEMBER 2019 FORUM 15

ake a moment to consider thisadvice from one of the world’smost renowned business leaders,Jack Welch, former CEO of GeneralElectric:“Change before you have to.” What Welch meant can be sum-

marized in two words: be proactive.Get ahead of any big change that could disrupt yourbusiness. If you wait until the change occurs, you’ll bein catch-up mode, with the possibility that your businesswill never fully recover.Now the big question: Is our industry on the cusp of

such a change? Are financial advisors at risk? I think it’sclear that change is already happening, and that manyfinancial advisors will be challenged to maintain the sta-tus quo. But I also think our industry — and individualadvisors — can address these challenges head on andprosper. The key is to be proactive — starting now.“Disruption” is the buzzword of our time, and for

good reason: So many businesses have faced it. Appledisrupted the way people interact with technology.Twitter disrupted the way people communicate andnews is shared. Uber disrupted the taxi industry.Companies like Airbnb, Expedia, and Trip Advisordisrupted the travel industry. And where do you startwith Amazon, the disruptive elephant in the room?While it may seem like technology is driving this

change, it’s really people’s needs doing the driving.Technology is the great enabler, but the true genius ofsuccessful disrupters is identifying the pain points inthe customer experience and creating a solution to over-come it. Look at Amazon. They’ve been a successful disruptor

for many reasons, but I believe two big ones are thatthey:• Eliminate pain points (everything from long deliverytimes to finding parking to lack of choice), and makean unhappy experience a happy one.• Restore trust (with strong guarantees and consistentservice levels).Are there pain points and trust issues for people seek-

ing advice relating to investments, insurance, or financialplanning? You bet. Consider these: • Skepticism due in part to the gap in financial liter-acy: I see a wide financial literacy gap — and peopleare skeptical of advice and advisors, and fearful of being“taken.” • Lack of understanding of the role: It’s been my expe-rience that people don’t know what advisors can do forthem, and they also don’t know where to go for help, orhow to find a good top-rated advisor. • Lack of trust: Canadians face a barrage of ads thatsuggest advisors are taking away from people’s savings— and that the cost of working for an advisor is notworth what they get in return. The impression that’s

left? Advisors are salespeople, with the primary goal oflining their own pockets.

Disruption is ComingI know many in our industry felt that commission dis-closure and CRM2 would be a significant disruptor ofour industry. While the fear of this happening was bothreal and uncomfortable, I don’t believe it has hurt mostadvisors on the mutual fund side. At least, it hasn’t yet. Disruptors see a specific opportunity — or some-

thing lacking in the marketplace — and they take advan-tage of it. While CRM2 didn’t lead to immediate cashoutflows from mutual fund–based practices, it did pro-vide fuel for the robo-advice firms to launch an aggres-sive campaign that continues to plant doubt in the mindsof financial services consumers about value for money. The aggressive nature of the campaign is no surprise

given comments by digital wealth management compa-nies. In an article from Financial Planning magazine backin 2012, Andy Rachleff, co-founder, executive chairman,and CEO of robo-advisor firm Wealthfront, laid downthe gauntlet in succinct terms:

“Making airline reservations was expensive and the reser-vation system was only available to travel agents…. WhatExpedia and Kayak did with travel reservations, we can dowith financial advice.”But here’s the thing. While the travel industry has

seen disruption, and the number of travel agency retaillocations has certainly decreased, the agents who haveremained are doing well. They’ve defined their categoryof travel or target market, they provide exceptionaladvice and service, and they’ve developed a very loyaland trusting client base. In other words, the great agentsof yesterday are still great agents today.And that’s where we can throw the gauntlet back

down at the feet of robo-advisor firms. The good finan-cial advisors of yesterday and today will continue tothrive into the future, provided they continue to offerthe expertise, advice, and service that robo-firms can’tmatch. It’s the advisors who don’t currently operate atthis high level who are in danger.This applies to the insurance side of our business as

well. Insurance is ripe for the kind of disruption that hasroiled many other industries, from retailing to travel tobanking. No insurgent has yet achieved the critical mass nec-

essary to become a power player in a major insurancemarket. There’s no Apple or Google of insurance visibleon the horizon. Insurance is a highly regulated industry,creating barriers to entry. But as innovators have shown in other industries,

such obstacles can be overcome. Incumbent insurerscan’t afford to be complacent. Their customers, especiallyyoung, digitally savvy ones, are very open to taking theirbusiness to a newcomer. P

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16 FORUM SEPTEMBER 2019

Trust as a Key Competitive AdvantageWhile there are many elements to being a top advisor, the one ele-ment that encapsulates all others is trust. There needs to a base level of trust before someone will meet

you, agree to work with you, and give you their business. Trustdoesn’t come from a cool online presence, local sponsorships, ormailings and calls — although these all can help. Trust comes from three things that, when delivered conveniently

and when the client is ready, can form the basis for creating a clientfor life. 1. Expertise: People need to feel confident that you have expertisein the areas in which you’re helping them. This will be based on acombination of experience and credentials. And while we may wantto help in all areas of a client’s financial life, it’s counterproductiveto be all things to all people, because none of us are experts in every-thing. Be clear about what you can and cannot do.

2. Customization:No one wants to be sold a product or a conceptthat you pitch to everyone. Clients want to know that you’ve takenthe time to get to know them and will propose a set of recommen-dations that are personalized to them. While there will be overlapin products and recommendations for different clients, personal-izing your recommendations to the individual client is importantfrom a trust perspective.

3. Results: Over time, your results will speak for themselves. Onthe investment side, has a client’s average level of return and volatil-ity been consistent with expectations? On the insurance side, is aclient’s anxiety (and risk) level lower than it was at the start? If theproper insurance is in place, it will be.

Moving Forward Good advisors will embrace change and disruption. Those whodon’t could be forced out of the industry. But like the travel indus-try, the good ones will survive and thrive. An example of change that could be coming soon is the greater

use of apps to find qualified advisors. A pain point we hear is thedifficulty people have in finding an advisor, even with more than100,000 of them in Canada. An app with ratings puts the user expe-rience front and centre. It’s convenient, easy to use, and helps savetime and effort.The use of ratings may make some advisors uncomfortable.

But, ultimately, these ratings will filter out the bad advisors weknow are out there — the ones who thwart our efforts to buildtrust with consumers across our industry. In addition, Sun Life’s experience with individual ratings in

many areas suggests that people are generous in their assessmentof service. For example, Sun Life reviewed more than 10 millionratings of health-care providers: Massage therapists, dentists,chiropractors, and more. The vast majority (87 per cent) ratedtheir provider five out of five. This suggests that any culling ofadvisors as a result of ratings will likely be at the bottom end ofour industry — where it should be.

With the use of apps comes a greater online presence — and oneof the best ways for you to prepare for change and disruption isto use this platform to articulate how you add value. Specifically,consider an online profile that clearly explains the following:

• Why you do what you do: Organizational consultant and authorSimon Sinek built his career on a simple idea: “Start with yourwhy.” Explaining why you do what you do links to the part of thebrain that controls emotions and decision making. Articulatingyour why will help you connect to clients. Because as Sinek states,“People don’t buy what you do, they buy why you do it.”

• Who you work with: If you don’t work with everyone, in everylocation, at every income level and life situation, don’t pretendthat you do. Potential clients want to see themselves in your profile.So be clear about things like age range, net worth, profession, orany niche market that you serve.

• How you work — your process: Remember — people are highlyskeptical of our industry because of the perception of a sales focus.You need to highlight the advice focus, which starts with learning,listening, thinking, and then advising. Product sales are the resultof good advice, so explain the process you follow with clients —from the first meeting through a lifelong relationship.

• What services you provide: Top advisors do not do all thingsfor all people. They are very specific with their specialty and referto other advisors when clients need things they do not provide.Examples include:-Protecting family and income from life’s risks-Creating a financial plan for the future-Planning retirement-Turning savings into retirement income-Budgeting and debt management-Managing a business’s financial and protection needs-Estate planning

While a top advisor may have experience in several of these,they will refer their clients to others when the need strays outsideof their area of expertise. For this reason, advisors who work ina multidisciplinary firm, or who maintain a reliable network ofother trusted advisors, will be in a position to best serve theirclients. In the end, it won’t be changes like commission disclosure,

online trading platforms, or robo-insurance (if it comes) that willdisrupt our industry. It will be the failure of advisors to commu-nicate the value they bring, and to deliver consistently on thatpromise. Only once the value of advice is articulated can we addressthe false assumption that advisors are salespeople first, and trustedadvisors second. It’s time for all good advisors to express their why, how, and

what, so when prospects seek an advisor, they will love what theysee and welcome the relationship. If you’re doing all the right thingsto create a great client experience, disruption can’t touch you. Makeit happen, and watch your business grow. �

WAYNE MILLER, ASA, ACIA, is associate vice-president, strategic businessdevelopment at Sun Life. To receive a PDF of this article, email dgageforum@gmail.com.

INDUSTRY