Kitces' point was that integrating technology through the ages has helped grow businesses — for those who adapted — and for advisors to survive this disruption, they need to do the same and embrace technology to grow their business. He noted five trends he saw:

Technology has and will continue to reshape the business, which is why the commission vs. fee debate still rages, although most managers are moving to a fee-based structure. "It's hard to ask for 1% of AUM when a client can do what they [advisors] do in two mouse clicks," said Kitces.
The Great Convergence. Stock "jobbers" were separate from RIAs, but that changed, especially as the now-defunct Labor fiduciary rule determined that the term "fiduciary" meant all played by same rules. Although that was shelved, the convergence continues globally. "Regulation is not the cause, it's the effect," Kitces said. "Technology was the cause and drove us to a new business model."
Crises of differentiation. Using various sources, Kitces' estimation showed only 21 clients (realistically) per financial advisor going forward. This means advisors will have to differentiate in a way that puts them first in a Google search. "We're not feeling the pain yet," Kitces said.
New business models. Kitces told the audience that he really hasn't heard complaints about the AUM percentage model; that said, he says the new business model will be 1% of income.
Client experience: "Eventually, the courts will see we all give advice and are all fiduciaries," Kitces predicted. He said "it's not just differentiation, but what are you best at?" that will set advisors apart.

Further, investors will expect an "experience model" that takes the meeting or usage of advisors to the next level, and not be today's semiannual visit that can introduce strife.

Instant Insights /

Kitces' 5 trends of the future for advisors

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