The successful financial planner of the future will have more in common with a medical specialist than what we now know as a financial planner.
This is one of the startling predictions made by US-based Undiscovered Managers in a recent report on the future of the financial planning business.
The report, The Future of the Financial Advisory Business Part II: Strategies for Small Business, predicts that financial planners will need to become specialists in a niche in order to stave off an inevitable squeeze in margins. This does not mean targeting a group based on age or net worth, but selecting “a segment of the population that share similar, complex problems”, and then providing a solution to their problems.
Undiscovered Managers argues that only niche financial planning businesses will survive the upcoming revenue drought and cost hike. Those who fail to make the transition to a niche business will face revenue of 0.5 per cent of funds under administration, less than half of what most successful planners are charging today.
A niche business will be able to charge a premium for its services in much the same way as a medical specialist charges for their talents. Medical specialists such as surgeons, chiropractors, dentists and podiatrists are able to charge a premium for their services because they provide solutions for the complex problems suffered by a relatively small segment of the population. Undiscovered Managers reckons the successful financial planner of the future will
