How the Financial Services Industry is Changing

Published: July 22, 2020 | 12:53 AM ET

By: Ivory Johnson, CFP, ChFC, Founder, Delancey Wealth Management, LLC

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Financial advisors and the experts occupying split screens on cable television shows have preached to consumers about all things financial for decades. We engage in buzzword bingo, spreading the gospel with time horizon stump speeches and tales of stock market outcomes described in Greek letters.

The relationship between consumers and purveyors of financial planning expertise, however, is shifting. Our clients aren’t quite as interested in pie charts and analogies. They may have wanted that picture on the brochure, the gracefully aged couple wearing white linen pants on a sailboat drinking a cup of coffee, but their objectives are changing.

COVID-19 has ushered in unemployment, health concerns and a recession. When 40 million people file for unemployment benefits and countless others are being forced to take pay cuts, nobody cares about brochures or financial literacy monologues. Instead, they need help focusing on what makes them happy and how we can help them get there.

Yes, the goal posts have changed, but consumers have relocated them several times in the past. Advisors could once get by with a Series 7; now we need the CFP designation. I recall the times when we built our books of business by cold calling until investors demanded a financial plan. The majority of our income was once earned from a commission until fee based became all the rage.

Now clients want us to help them find their sense of purpose so they can restore order to their lives. This is a natural evolution. I have clients who have retired with millions in their retirement accounts and go into depression once they leave the workforce. They go from Bob in the corner office to some middle-aged guy who needs a 3/16 drill bit at Home Depot. When their entire existence was built on power suits and bonus pools, retirement can be frightening.

The client who knows exactly what they want their life to look like and plans for that will get more out of our relationship than the people who are solely interested stock market moves and arbitrary numbers. When a prospect tells me they need a random account balance before they can retire, many don’t know why that number even matters. Worse yet, some are willing to give up the girl’s weekends, the golf trips, poker night, tailgating at their alma mater, family vacations and other experience that matter far more than an irrelevant benchmark.

Josef Schumpeter spoke of creative destruction that occurs when old industries give way to more innovative solutions. Today we call it disruptive technology. That same dynamic is now taking shape in the financial services industry. Consumers don’t want 3-inch-thick financial plans; they want to be happy. They want to wake up in the morning and go to sleep at night and do whatever they want in between without worrying about how much it costs.

They want the current version of financial freedom.

Ivory Johnson, CFP®, ChFC
Delancey Wealth Management, LLC
20 F Street, NW, Ste. 750
Washington, DC  20001
(202) 507-6340

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