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Advisor 2020The Forces and Opportunities Shaping

The Financial Services Advisor of the Future

From the GAMA Foundation for Education and Research

Peter H. Hoopis, CLU ChFC CLF

© 2014 by the GAMA Foundation for Education and Research. All rights reserved.

The GAMA FoundationFor Education And Research

• Dedicated to the success of field leaders

• Invests in research and provides easy-to-use resources

• Provides the insights, best practices, and proven techniques to be successful in all aspects of the field leader career

• Fully funded by field leader donations, not by companies or GAMA International dues

• Donations are tax-deductable


GAMA FoundationResources For Field Leaders

2020 Research Projects —Firm 2020 and Advisor 2020

A Shift From Best Practices

• What Field Leaders Can Learn From Top Performers in the Industry

To Emerging Changes and Opportunities

• The Trends that Field Leaders and Their Advisors Need to Be Prepared to Address

Slide 4 © 2014 by the GAMA Foundation for Education and Research. All rights reserved.


• The Market of the Future

• The Advisor of the Future

Two Separate, Independent Research Teams to Ensure the Richest and Most Comprehensive Findings for Agents and Advisors

•Future Business Models and Scenarios

•Forecasts for Advisory Practices

• Business Opportunities Based on the Forecasts

•Tools to Help You Apply the Findings

• Amazing Insights Into the Future

Two Studies in One

Thank You, NAIFA!

Industry Leadership

• Sponsorship of the Advisor 2020 Project

• Development of Advisor 2020 Programs and Resources

• Focus on Helping Advisors Implement the Findings to Better Prepare for The Future


Exclusive SponsorOf Advisor 2020

Why Advisor 2020 Is Important

Advisors Benefit By:

• Understanding the forces — economic and cultural — that are already affecting their practices

• Seeing the opportunities — and thinking more flexibly about their businesses

• Capitalizing on the trends most important to their business model

• Working ON the business and not just IN it


Why Advisor 2020 Is Important

The Findings Will:

• Disturb status quo thinking

• Spark new ideas about their practices

• Inspire creative thinking about the work they do and the value it provides

• Help advisors consider where they can best grow and excel in the coming years


Scope of the Research

LOTSOf Changes and Opportunities

For Advisors to Consider


Scope of the Research

Markets —

• Where will the money be in 2020?

• What populations will need our services?

Consumers —

• How are their needs changing?

• What do they want that we don’t deliver?

Technology —

• How will it help the advisor in 2020?

• How will it make our work more challenging?


20 Research Findings From Advisor 2020


Finding One

Baby Boomers Are Redefining Retirement

Encore Careers — second careers started at age 50 or later — are increasingly attractive to Boomers.

They have long life spans,are well educated, andhave strong incomes.

They are ready for their “second act” — one that has purpose and meaning.


Decumulating Wealth Is the Industry’s Next Big Challenge

Clients at every income level can expect to live into their 70s, 80s, and beyond.

To provide value, advisors cannot just sell products and manage investments.


Finding Two

Lifestyle Management Is The Key to the Affluent Market

• The rich are becoming richer, but there are fewer of them

• The competition for affluent clients will become more fierce

• Banks are well positioned for this market and will be challenging to compete against


Finding Three

Cross-Sector Collaboration Will Bring New Types of Partnerships

• For-profit service providers like homebuilders, travel agencies, and healthcare providers will open new channels of revenue.

• Nonprofits, colleges, and state and municipal governments will be key to bringing financial literacy and education to the masses.


Finding Four

Finding Five

Middle Market Growth and Opportunity

• Millennials and Gen Xers present a huge market

• Fewer affluent than in prior generations

• Strong desire for a financial plan

• May require new ways of doing business


Social and Community Marketing Is the Door to the Middle Market

• Access through educational partners like colleges and nonprofits.

• Build professional credibility through community education.

• Build stronger communities by investing in adult financial literacy.


Finding Six

The Middle Market Needs Financial Education

• Less financial experience

• Fewer role models for saving and investing

• May believe that saving is difficult

• May view saving as reduced consumption rather than deferredconsumption


Finding Seven

Finding Eight

Sales and Service Teams Will Grow in Importance

• Consumers expect high levels of service and responsiveness

• Pressures on profitability will required increased efficiencies


Finding Nine

Small Business Markets Will Grow in Importance

• Their employees are professionals and better compensated than most.

• They often lack benefits.

• They may identify more with their profession than their employer.

• This largely ignored market will become increasingly attractive.


Finding Ten

Commoditization Will Continue to Pressure Commissions

• Products will become increasingly commoditized.

• Teamwork will become more critical to sales and business retention.

• Fees and levelized commissions will become more likely sources of compensation.


Finding Eleven

The Globalization of the Client Base Will Force Changes in the Industry

• By 2020, 20 to 30 percent of U.S. adults — your clients — will have spent time working overseas.

• Regulators — and companies — will need to accommodate the needs of overseas clients.


Finding Twelve

New Risks for Modern Families

• Single Heads of Household

• Unmarried Couples

• LGBT Couples and Adoptions

• Blended Families

• Extended Families


Finding Thirteen

Technology Will Allow Advisors to Focus on Micro Markets

• Analysis of big data will allow a much deeper understanding of consumers.

• Advisors will be able to target highly-specific populations (such as first generation Ethiopians in Seattle).


Finding Fourteen

Data Modeling and Simulations Will Elevate Marketing Support

• Advisors will enjoy highly-refined market leads and sales simulations.

• Advisors will be able to understanding consumer needs and preferences at a more refined level.


Finding Fifteen

Consumers and Regulators Push for Increased Business Transparency


Finding Sixteen

Virtual Advising Will Become Routine and Often Preferred

• Leading-edge advisors use videoconferences today.

• Improving technologies will deliver more nuance for more effective distance communication.

• Improved efficiencies will make it preferred for both advisors and consumers.


Finding Seventeen

Expectations of Privacy Are Shifting

• Social media has shifted privacy expectations.

• NSA revelations have elevated privacy concerns.

• Both privacy and security concerns will be moving targets and potential landmines for advisors.


Finding Eighteen

Middle-Market Success Will Be Contingent on Highly-Customized Products


Finding Nineteen

Technology Will Empower the Consumer as Much as the Advisor

• Consumers will be able to do their own product analyses.

• Complex products and services will be easily compared online.


Finding Twenty

Consumers Place A Growing Emphasis On Shared Values

• Their discretionary spending is limited, and they spend those dollars carefully.


Implementing Advisor 2020Key Strategy


#1Data Aggregation

and Planning: eMoney,

Morningstar, Profiles

Professional

• Comprehensive & Holistic Advisory Services

• Strong Desire for Financial Planning

• One place for all their stuff; anytime, anywhere, on the phone, tablet, etc.

• High Level of Service

• Responsive Advisor; Responsive and don’t have to do the work

• Consultative Sales Approach

• Customized/Personalized• Services not Transactions

• Plan for all their goals/concerns

• Plans that Change as their lives & needs change



#2Service & Support that

differentiates you from others & allows you to compete with

Big Banks/Firms.

• Can’t just sell products and manage money anymore

• Plans that change as their lives & needs change

• Lifestyle management

• Pressure on profitability. Require increased efficiency

• High level of service and responsiveness

• Clients want to feel valued

• Team Work• Want a single point of contact

• Requires new way of doing business

• Continuity of service

• Responsiveness

• Efficient Process that respects their busy lives• Consumers will be able to do their own product analyses



#3Embracing

Technology for our Advisors advantage

• Clients can educate themselves before talking to an advisor- We must be educated

• By 2020, 20-30% of US adults will have spent time overseas; embrace technology to support

• Virtual advising will become routine and often preferred. Video conferencing/webex-leading edge advisors use video conferencing daily

• Must be responsive; always in contact, email, text, chat, cloud

• Everyone wants improved efficiencies

• Social media to effectively communicate and set brand, values, relationship. Help them find us.

• Clients want a deeper connection; social media, FB fan page, Constant contact

• Want to feel valued-Constant contact

• Clients want the assistance of an advisor they trust- use technology to build relationships; values, trust

• People want to do business with shared values, firms; social media can help build



#4Collaborative

Work Environment

• High Level of Service/ Responsive

• Learn that saving & Investing isn't hard- seminars/worksite marketing

• Transition Book of Business & Retain clients

• Efficient Process for their busy lives

• Next generation wants it

• Fewer affluent clients than before-maximize efficiencies

• Shrinking commissions will require increased efficiencies

• Financial Specialist

• Lifestyle Manager

• Rain Maker

• Client Relationship Manager

• Product Service Specialist

Some Big-Picture Takeaways


Advisory Practices of the Future

• Team-base practices will grow in importance while lone wolves struggle in small markets.

• Retiring Boomers will create new business opportunities that challenge conventional practice.

• The middle market will present the most significant growth opportunities -- as well as significant challenges.



• Small businesses will become an increasingly attractive path to reach well-compensated prospects.

• Consumers will require consultative selling, and most will need financial education.

• The diversity of modern families and the opportunities in micro markets will drive a focus on highly-customizable products.



• Business models will become increasingly flexible and responsive to individual consumer needs.

• Product commoditization and pressure on commissions will spark new approaches to compensation.

• Technology will empower advisors -- and consumers -- and success will result from bringing value through advising.


Call To Action


is not a viable option

; lets be collaborators not competitors.

; change at the level described in Advisor 2020 will takes lots of it.

and become the change agent for your firm and your team

will help you recognize opportunities and initiate meaningful change

THANK YOU FOR ATTENDING TODAY’S SESSION!

We value your feedback.

Please complete the simple online workshop evaluation for this session using your LAMP app:

LAMP app/Survey/Advisor 2020

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