Gihan Perera is a futurist, conference speaker, author and consultant who gives business leaders a glimpse into what's ahead - and how they can become fit for the future.
A look at three important trends, one over-hyped technology and three key skills that will help shape the profession over the coming years.
It’s been a challenging year for many in the financial services industry, and you don’t need to be a futurist to see some of the immediate changes ahead, for example:
• Increased monitoring and oversight from ASIC, backed by the Government;
• The end of the vertically integrated model; and
• An acceleration of advisers leaving the industry.
But what other changes can we expect, especially from trends and technology outside the industry? Let’s polish our crystal ball and look at what experts are predicting for the next few years.
Let’s examine three important trends, one over-hyped technology and three key skills for the future.
Artificial intelligence (AI)
According to Gartner’s most recent annual ‘hype cycle’, the dominant technology in the next 3-5 years will be artificial intelligence (AI). That’s a no-brainer, because we’re already using AI in many ways, including online chatbots, credit card fraud detection software, predictive text on your smartphone, and virtual assistants like Google Home and Siri.
Some in this industry were spooked when AI reared its head a few years ago as ‘robo advice’. We’re still a while away from robo advisers replacing full-service human advisers (robo paraplanners, on the other hand, are not so far off), but that doesn’t mean you should ignore AI.
Think of ‘AI’ as ‘augmented intelligence’ or ‘assisted intelligence’, and it opens up a whole new world of possibility. Don’t think of robots taking your job – think of robots helping you do your job.
Even leaving aside its potential in investments and financial markets, AI can help you run your business better. For example, it can schedule appointments, predict traffic congestion, filter spam e-mail, make sales forecasts, provide basic client support, curate information sources, recommend better suppliers, and much more.
Trend 2: Intergenerational transfer of wealth
We’re about to see the largest intergenerational transfer of wealth in Australia’s history, with some experts suggesting more than $3 trillion will be passed down by Baby Boomers over the next two decades. This is either a massive opportunity or a major threat to financial advisers, depending on how well you’re embracing intergenerational clients.
This goes beyond just inviting your clients’ children to experience the same service you offer their parents. It means understanding their different way of thinking, different expectations of how money will serve them, and different demands of how they receive advice.
For example, Millennials (Generation Y) might not want 30-year mortgages, funds tied up in superannuation, or jobs with employers. They might choose work that involves global travel, short-term financial goals, and entrepreneurship as a way of earning income. How well does the expertise in your business help deliver advice that’s relevant for them?
The jury is out on whether children will hire or fire their parents’ financial advisers. A decade ago, surveys suggested most young people would want to hire their own advisers. But the industry adapted, and recent surveys are much more promising – but only for advisers who embrace the technological demands and demographic characteristics of younger generations.
Trend 3: Fintech
Fintech, a term originally used for technology that competed with financial institutions, has expanded into all areas of money management. In 2017, KPMG produced an infographic showing the diversity and reach of the Australian fintech landscape. Google that phrase and you’ll see the dizzying array of fintech companies offering services in – among other things – lending, insurance, wealth management, payments, and personal financial management.
If you don’t have at least a basic understanding of some of these technologies, you don’t understand your competition.
Hype: Bitcoin, cryptocurrencies and blockchain
I feel like I’m stating the obvious here, but surely you’re not advising any of your clients to invest in Bitcoin or crypto, are you? If you weren’t gullible enough to invest in the myriad internet money-making schemes 20 years ago, I’m guessing you’re not gullible enough to invest in internet money-printing schemes now!
But what about blockchain – the underlying technology that’s gained a massive amount of hype? Same same. There are a lot of people spruiking old technology and calling it blockchain, but evidence for real blockchain is underwhelming. It could be huge, but not any time soon. So, ignore it for now.
Skill 1: Personal brand
Now let’s turn our attention to key skills for the future, and the first is building your personal brand.
According to the Institute for the Future, in its 2018 Future Skills report, “Brands aren’t for celebrities anymore”. Whatever your role, invest time and effort in building your reputation as a trusted expert in your own right. That enhances your credibility (even as an employee) and positions you strongly as an authority in the profession.
If you’ve already built this reputation due to your longevity in the profession and it has enough momentum to last until your retirement, I’ll give you a ‘Get Out Of Jail Free’ card on this one. But otherwise, it’s an essential part of your ongoing success.
Closely tied to this skill is another that the Institute for the Future identified: new media literacy. How well are you using new media for communication? If you haven’t progressed far beyond email, it will be difficult to enhance your personal brand online.
Skill 2: Innovation
According to the World Economic Forum’sThe Future of Jobs Report 2018, the top skill in demand in 2022 (unchanged from now) is analytical thinking and innovation. As advisers, you know this skill well because you apply it for your clients’ plans and portfolios. But do you apply it just as diligently for your own business growth?
If you’re doing business the same way you’ve always done it, you’re running the risk of falling behind. As Shane Warne said about another cricketer (one of the few times I’ll quote Warney in a positive way), “He hasn’t played 30 Test matches – he’s played the same Test match 30 times”.
Skill 3: Active learning
Ah, FASEA! Love them or loathe them, new educational standards are a part of this profession’s short-term future.
Take heart from realising this enforced investment in ongoing education is giving you a head start over many other industries. The World Economic Forum report suggests that, to manage the changes in the workplace that will happen over the next four years, everybody will need an extra 101 days of training. So, it’s not just you!
How will you prepare for a fast-changing world?
Whatever your role and how ever mature your business, you owe it to yourself, your clients, your team, and the people who depend on you to learn, assess, and plan for an uncertain and fast-changing world. The more you scan wider and look further, the better prepared you will be. As J.R.R. Tolkien wrote in The Hobbit: “It does not do to leave a live dragon out of your calculations, if you live near him.”
See you in the future!
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