The number of financial adviser jobs is expected to grow 17% in the next decade. Technology has enhanced the value advisers provide to clients by automating routine tasks. This frees up advisers to focus on personalized services.
Financial advisers now offer value-added services, such as tax-efficient strategies, asset allocation, and retirement planning. These services require a deeper understanding of clients’ financial needs. Michael Kitces, the president of Kitces.com, said, “Technology never really materially displaced advisers.” Instead, it has enhanced the value advisers provide to their clients.
Routine, repetitive tasks that were once a significant part of the job are increasingly handled by technology. “The advisory business is actually an even deeper, more enriched value proposition now than it was 20, 30, 40 years ago. We have technology that increasingly automates much of the trading process.
So we get to spend more time actually helping clients with the full breadth of their financial needs,” Kitces said. Financial advisers lean into personalization, similar to travel agents. Although many travel agent jobs were lost to automation and self-service models, travel agent productivity has risen significantly since the internet disrupted the industry.
Technology enhances financial advisory services
Today, travel agents offer value-added services, helping clients book trips and experiences they couldn’t do on their own. Similarly, in the financial advisory world, tools have been developed that enable financial advisers to streamline much of the implementation process.
Twenty years ago, a retirement adviser might primarily focus on building a diversified, well-allocated portfolio. The real value now lies in delivering highly personalized advice that helps clients navigate their financial situations. When life is simple, many people feel comfortable managing their finances on their own.
But when financial situations arise, “suddenly financial advisers become much more relevant,” Kitces added. Advisers help with tax-efficient strategies like Roth conversions, coordinate asset allocation across multiple accounts, create tax-smart withdrawal plans, optimize Social Security timing, and bridge health insurance gaps for early retirees until Medicare kicks in. They can also help with Medicare decisions, evaluating long-term care options, and even vetting continuing care retirement communities.
However, the industry faces a ‘crisis of differentiation,’ with consumers struggling to distinguish between advisers. This highlights the need for advisers to articulate their specialties and clearly define their ideal clients. Kitces said the onus is on advisers to articulate their specialties so that consumers get a better sense of who can help them best.
His advice to advisers: Clearly define who your ideal clients are and how to serve them effectively. This will help you to stand out in a crowded marketplace and demonstrate why you’re the best adviser for a specific client segment.
