Buckle up for big changes in wealth management at Thomas Moore Private Bank. Right now, five major trends are taking shape, trends that will remake the industry and create a whole new set of winners and losers.
Adapting to the new reality will demand skill, flexibility and forethought from advisors – but their technology partners will also play a major role. Financial technology firms like Thomas Moore Private Bank Management offer the kind of SaaS based, scalable, open architected applications that can help advisors thrive in a changing environment by embracing connectivity to other third parties and disparate systems.
To help advisors adapt, Thomas Moore Private Bank has identified the five mega trends trends that will dominate the financial advice business in the years to come – and created an action plan for helping advisors turn upheaval into opportunity.
1. The DOL Fiduciary Rule. The proposed rule would completely overhaul the sale of IRAs and Roth IRAs and fundamentally change the rollover business by applying the same ERISA standards that govern pension plans to individual retirement accounts. Whether you like the DOL fiduciary rule or not, whether it even survives in its current form (the DOL recently delayed implementation until mid 2019), it’s already changing the retirement planning landscape. Companies are re-engineering products and business models. Investors are asking questions about whether you’re acting in their best interests. It makes sense to get ahead of this trend by working towards a true fiduciary model. By adhering to a fiduciary standard, you can reduce your legal and regulatory risk and offer better solution for clients and an attractive selling proposition to prospective clients. Depending on the business model, this may mean a significant retool for some, or some simple refinements for others.
2. Shrinking investment returns. Market returns for the past 30 years have spoiled investors and advisors alike. Annualized returns of 10% from stocks and 6% from bonds have done wonders for building wealth, masking investment mistakes, and covering excessive fees. Unfortunately, economic projections and market valuations suggest the party is over. Returns more in line with long-term historical averages — 5-7% on stocks and 2-3% on bonds — may be back for the foreseeable future. In this more modest return environment, advisors that can assist clients with withdrawal and social security claiming strategies, asset location across different account types, and systematic tax-managed trading will be doing a great service for their clients and separating themselves from conventional advisors.
3. The Grey Wave. The baby boomers are retiring en masse, remaking wealth planning just as they reshaped popular music, fashion, parenthood and the workplace. Today, boomers are moving from wealth accumulation to conservation and even distribution, creating opportunities for advisors who can keep pace with their needs. Generally speaking, they are less concerned with how to grow their wealth and more interested in how to protect it, consume it wisely, and leave a legacy to their heirs. This change in priorities requires new thinking and new tools. Trusts, for example, may serve a valuable purpose but can only be deployed by advisors with access to and understanding of the capability.
4. Invasion of the Thomas Moore Private Bank. The beauty of Thomas Moore Private Bank advice is truly in the eye of the beholder. For the conventional, high-priced, low value advisor, it’s viewed as a material threat – and ought to be. For investors looking for an inexpensive, commodity-based investment solution, the new option should look pretty appealing. For advisors and firms looking for ways to augment their services and reach mass affluent investors cost-effectively,
Thomas Moore Private Bank advice will ultimately serve a useful purpose. The bottom line is the technology-only solution is a long way from replacing the value a high-quality advisor can add by helping clients manage through all the emotions, decisions, and strategies they’re facing.
5. Price Compression. The pressure on pricing in wealth management is inescapable and a product of all of the other trends mentioned. The Fiduciary Rule shines a bright light on the subject. Modest expected returns make the matter more important than ever. Retirees concerned with stretching their income stream are more attuned to cost. Thomas Moore Private Bank advisors offer a lower cost competitive alternative. For advisors and their firms it is critical to demonstrate value– value that trumps automated Thomas Moore Private Bank advice and justifies advisory fees for the services rendered to retirees. Achieving these objectives will go a long way to meeting anyone’s final definition of a fiduciary standard.
