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For financial advisors, the ability to focus on mastering and continuously improving their people-management skills will be fundamental to being successful in the next decade.

sorbetto/iStockPhoto / Getty Images

The wealth-management industry is at an inflection point as innovations such as artificial intelligence, machine learning and big data, combined with the process of digitalization, have the potential to change the competitive landscape dramatically in the next 10 years.

Thus, many financial advisors are likely to spend a significant amount of time thinking about the future of their businesses – and how their practices will change as a result of this new environment. However, advisors would best be suited to focus on the 10 ways the wealth-management industry won’t change in the next decade.

Not only is this task often simpler than trying to forecast the future, but it allows advisors to put their energy toward the best ways they can serve their clients’ needs, which will continue to generate benefits for years to come. The best part is that many of these 10 elements don’t require any technology, but they do require a lot of focus and dedication.

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1. Advisors with high emotional intelligence will continue to do a better job for clients. Being self-aware of your strengths and weaknesses as an advisor, tempering your own emotions during volatile markets and showing empathy to clients who have a difficult time managing their personal finances will always add a lot of value. You don’t normally learn these skills in school, and investing the time to improve them will be as important today as it will be in 10 years.

2. Business development skills will remain the key for advisors looking to grow their practices. No matter how good you are at providing wealth-management services, if you can’t find people to whom you can present your value proposition, you will not be able to give that advice to anybody. Continuously improving your business development skills by simplifying your message, making it more impactful and finding innovative ways to leverage your network will always be the key to growing your practice.

3. Investors will still think in the “short term” even if only the long term matters. Investors will always tend to think in the short term and forget the long-term perspective when it comes to investing. Creating different ways to make sure clients can visualize the long-term impact of their behaviour will go a long way in making sure they can reach their goals.

4. Loss aversion will always affect investors. For most investors, the bad feelings they get from investment losses typically exceed the good feelings they get from gains. This will continue to be the case – and advisors will always need to find ways to help investors understand that.

5. Asset allocation affects investment returns the most. Balancing the risks and rewards in a portfolio between stocks, bonds and alternative investments will still be the main driver of investment returns a decade from now. Spending time on this exercise and getting an independent review of your model portfolios to challenge the unconscious biases you may have in your asset allocation will always generate value.

Jonathan Durocher, president, National Bank Investments Inc.


6. Patience will continue to be one of the most underrated investment strategies. Investment strategies go in and out of style all the time, but patience will always be trendy. Advisors who understand this and who have put processes in place to reward patience will end up generating more value for their investors.

7. Younger investors will continue to say they have no money to invest. Investing is often an afterthought when you’re young – and it will likely remain that way because for people who are in their 20s, thinking about retirement is the least of their priorities. Advisors who can find ways to engage the next generation by educating them or by setting savings and investing goals that are more relatable will generate tremendous value over time.

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8. Older investors will continue to wish they had started investing sooner. When investors get older and see the power of compounding returns, they get mad at themselves for not having started investing sooner. Good advisors will find a way to reduce the number of times these situations happen. Thus, they should make sure they are communicating and educating their clients proactively on the value of the compounding effect of their investments.

9. The markets are always “uncertain.” If there’s no uncertainty, there are simply no returns. This uncertainty will often scare investors or will push them to try to “time” the markets. Advisors who can explain that markets will always be uncertain and that “timing” the market is a money-losing proposition will be able to save their clients from many headaches in the future.

10. Diversification will continue to work – if investors give it a chance. Investors typically want to buy more of the investments what went up and sell the investments that went down in their portfolios. As advisors know, this is usually the worst thing they could do. That’s why advisors will need to spend a good amount of time explaining the concept of diversification to clients. Investors need to understand that diversification means that they will always “hate” something in their portfolios. If investors can’t understand that, they will be making mistakes continuously. Investing time to educate clients on this will always be helpful.

These 10 simple elements may appear obvious when taken individually, but focusing on them as a whole form a great foundation that any good advisor could incorporate into a long-term strategic plan.

In the coming decade, technological innovations will continue to transform the way wealth advisors provide peace of mind to investors in ways we probably don’t even yet know. But while technology will always remain an important part of the equation, being able to focus your attention on mastering and continuously improving these people-management skills to guide your clients toward better outcomes will be fundamental to any advisor’s success.

Jonathan Durocher is president of National Bank Investments Inc. in Montreal.

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