Advisors Evolve: Adapting for the Post-COVID-19 World

By Colin Falls, President, GeoWealth as published in WealthManagement.com’s 2020 Midyear Outlook

I write this on June 9, as our country is just beginning to reopen and the National Bureau of Economic Research officially stated that we have entered a recession. The pandemic has been an upending time for us all, sending shockwaves through many industries. Now that we are beginning to see a sliver of light at the end of the tunnel, I wonder how much of the enormous change over the last months will prove to be permanent and what that means for the future.

Like many industries, we’ve had to adapt to a new world rapidly. As president of a technology and turn-key asset management platform (TAMP) that supports Advisors across the country, I’ve had a unique vantage point during these times. I’ve seen, first-hand, countless Advisors accelerate their digital transformations and make structural changes faster than ever before in order to meet their clients’ enhanced needs. I spoke to an Advisor who put it succinctly when he told me, “if any aspect of my practice isn’t working during COVID, I have to fix it now, not tomorrow.” Every pundit has a working theory on what the new normal will look like. Most, like myself, believe our industry is undergoing historic change that will continue to shape things for years. But what are the structural components of that change?   

Recession Advisor Response & Adaption

Advisors understand that the most valuable aspect of their business is the relationships with their clients. During periods of volatility, Advisors feel even more strongly that all of their efforts must be deployed towards their clients – more calls and emails, more virtual meetings, more support. A notable challenge that Advisors are now facing is managing their clients’ heightened needs on top of the responsibility of running the operational aspects of their firm. We now see a major change occurring in the industry: the philosophies of firms and their Advisors. Through the 10-year bull market run, Advisors did not feel urgency to address operational inefficiencies. Now they do. If Advisors can devote more time to their clients by outsourcing components of their investment management operation, they are going to do it. If Advisors can better communicate with clients by changing technology providers, they are going to do it. Everything is on the table now. This pandemic and the resulting volatility have forced Advisors to become more dynamic business leaders in order to succeed – and those that haven’t shifted gears, must do so soon to remain competitive.

The Need for Strategic Partners

These difficult times have exposed the need for good friends. In an extremely volatile and fluid landscape, Advisors have leaned on their partners in a big way. The relationship managers at the significant custodians have fielded questions on everything from the Paycheck Protection Program to the elimination of transaction fees to guidance on best practice management protocols. Compliance consultants are advising firms on the potential risk factors they should address during this volatility. When it comes to investment management, many Advisors managing their own models are left without a “partner” to guide them. As a result of the current environment, many are considering for the first time working with an OCIO or TAMP. They are realizing they need friends they can lean on when things get tough. I believe this trend will continue as more Advisors realize the benefits of professionally managed portfolios.