Wealth Management 2022: Be the Solution

By Dave Coffaro

Changes in daily life as urbanization shifts unfolded. Social unrest. Cultural and political change. New ways of shopping for food, clothing, and home goods. Access to new forms of entertainment.

It’s all America in the 2020s. Ironically, these descriptions parallel much of what was happening in the 1920s. Add COVID-19, new domestic and global concerns to the mix, and the “roaring twenties” take on a whole new meaning this time around. Wealth advisers understand that changes in clients’ personal lives have a corollary in their financial lives. Expectations evolve, alternatives proliferate and the competitive landscape is redefined.

Looking back at the dynamic operating environment during the first two years of our roaring 2020s offers valuable lessons to inform wealth advisers in preparation for 2022. Here are five essential things we’ve learned from the past two years:

  • Expect the unexpected. COVID-19 was a surprise. It’s not likely we’ll experience another pandemic in the new year, but there will be unexpected events requiring adviser agility and ability to adapt quickly to changing conditions. Those advisers and firms that pivoted quickly in the early 2020s, adjusted their client engagement model effectively and confidently presented a new “business as usual” client experience prospered. Those that waited until things “returned to normal” are, well, still waiting.
  • Everything is more connected than we thought, and that affects wealth clients. Global supply chain disruptions highlighted interconnectivity. It’s not quite string theory, but when disconnects create global ripples, distilling implications for wealth clients becomes a valuable practice for advisors. Clients need to know how global events and conditions impact their financial lives, and, what, if anything, they can do as the environment evolves.
  • Client expectations changed forever. In the financial services arena, as with many other areas of daily life, digital-first became commonplace. In addition, many wealth providers upped their proactive outreach to clients during the pandemic. They proved a long-held theory that proactive outreach enhances client relationship retention, expansion, and new business growth. The pandemic wasn’t the root cause; it simply accelerated a long-running evolution. There is no getting back to “the way things used to be” with client expectations.
  • Advice matters more than product. In wealth management, advice has always mattered. Still, greater uncertainty elevates demand for advice. At a time when most wealth products are easily replicated, discounted, or available on a self-service basis, advisors have seen the power of advice in developing and retaining relationships. The past two years have shown, particularly in times of uncertainty, individualized advice is a differentiator.
  • Even in times of accelerating, seemingly random change, there are patterns to recognize. In This Time is Different: Eight Centuries of Financial Folly, economists Carmen Reinhart and Kenneth Rogoff describe a consistent pattern by central bankers, policymakers and investors that leads to the creation of new financial crises. While the global economic impact of COVID-19 had unique characteristics, advisers can garner lessons from historical economic patterns to help clients avoid the “this time is different” syndrome.

What do these lessons mean for wealth advisers in 2022? Here are five ideas to help advisers be the solution their clients need in our new roaring twenties:

  1. Define your role in helping clients succeed financially, now and for multiple generations. An advisor’s relevance with wealth clients refers to pertinence, importance, or meaningfulness. How does an adviser earn and sustain relevance with their clients? Learn what matters to the client today, remain attuned to changes in their personal lives and how changes translate to financial activities, anticipate what will matter tomorrow and adjust your engagement approach as needed.
  2. Master the art of inquiry. In The 7 Habits of Highly Effective People, leadership author Steven Covey wrote: “seek first to understand, then to be understood.” Being the solution for clients is about uncovering, understanding and then addressing their needs. Knowing the client, their wealth management strategy and their family is foundational to creating meaningful advice. How do you develop, evolve and sustain the necessary understanding? Master the art of inquiry—asking meaningful, relevant, pertinent questions, and demonstrating genuine curiosity about the client.
  3. Anticipate what’s next. Advisers bring economies of experience and knowledge to anticipate needs and help clients see beyond their line of sight. Financial lives of wealth clients are in perpetual motion. They have an ever-expanding definition of value, broad access to services, new wealthtech options—and they are being aggressively pursued by other financial service providers. In addition, we are in the middle of an historic wealth transition across generations. A good place to begin anticipating what’s next in your clients’ financial lives is to identify how their financial lives different today than two years ago. Develop a sense for the ways recent changes may inform upcoming changes, build your evolving thesis into inquiry with the client, and adjust your outlook as new information unfolds.
  4. Act on reality. Life changes have a financial life corollary. Traditional life-stage changes and unanticipated twists and turns in a client’s personal journey affect financial activities. Being the solution as an adviser requires staying attuned to life changes, then preemptively offering individualized, meaningful advice. You are the solution when you create actionable advice that helps clients succeed financially through anticipated and unexpected life changes. Often, it is the advisor’s ability to help a client navigate an extraordinary, once in a lifetime event, that fortifies a relationship. Remember: an ordinary financial challenge you can address may be an extraordinary life event for a client.
  5. At the individual and firm level, determine what you can stop doing. Austrian economist Joseph Schumpeter used the term “creative destruction” to describe the way free markets and businesses evolve. Drawing from Schumpeter’s words, self-initiated disruption in your wealth management practice can preempt external disruption and provides a path to greater efficiency. By discontinuing minimally useful activities (for example, hosting frequent center-of-influence mixers that rarely yield new business), you can reinvest time saved to higher-yielding opportunities to be the solution to your clients and prospects in the new year.

There are many unknowns in 2022—market adjustments, tax law changes, inflation, to name a few—and that’s exactly the point. Being the solution to clients in the new year relies on your preparation based on what you anticipate, then demonstrating agility and adaptability to serve your clients’ best interests as conditions evolve.

Dave Coffaro provides strategic management consultation and executive coaching to for-profit and nonprofit businesses. As principal of the Strategic Advisory Consulting Group, he works with financial services businesses and nonprofits to achieve accelerating growth, more favorable economics, or both. In addition, he is co-founder of Atticus, a do-it-yourself estate settlement platform. His new book is Leading from Zero: Seven Essential Elements to Earning Relevance.