Refining the Financial Professional’s Value Proposition — when “What if?” is really the “Why?”

History of the Financial Markets

The financial markets in the United States started on May 17, 1792, with the signing of the Buttonwood Agreement, so-called as it was signed under a Buttonwood tree at what would now be known as The New York Stock Exchange. Prior to this, there was literally a 12-foot tall wall built by the Dutch to protect the area during trading activities. The wall was dismantled in 1699; however, when the “Stock Market” opened in 1792 the name “Wall Street” was adopted.

Time of Significant Change

As we are all aware, there has been a significant amount of change since that day in 1792. The Great Depression, that lasted from 1929 to 1939, was the cause of significant change to the securities industry’s regulations, including, the Securities Act of 1933, the Securities Exchange Act of 1935, among others.

And, of course, the advancement in technology, during the last few decades, has also caused significant changes in the investment industry. In the late 1990’s and early 2000’s, the introduction of the internet brought a completely different level of trading activity to the markets. These changes would also include the onslaught of day trading by individual investors and the “do it yourself” investment options.

During this time we have also seen additional significant changes in regulations, as well as, the consumers’ expectations of the markets, distribution of products and levels of support. The days of cold calling from the phone book to get started in this business, and; the so-called “Boiler Room” movies that have been made about them, are nearly extinct.

Most recently, we have seen the introduction of the Robo-Advisor. This also has left many financial professionals wondering how this new technology will impact their careers. This is when we should begin to think about our individual “What if?” questions, leading to our “Why?” for being in the investment business in the first place.

The Meaning of “What if?” is Really the “Why?”

The availability of more information to the consumer, and the increase of the speed of trading and market moves, add to the complexity of doing business than in previous years. In addition, there are more packaged and complex products to use today. Because of this, the average investors ask themselves more often, “What if?” - “What if this happens? What if that happens?” Investors are more concerned than ever about the scenarios that can affect their future. It can be overwhelming to understand all of it, let alone navigate through it all.

Mark Hoaglin, National Sales Manager, CUSO Financial Services, explains his view of the effects of the Robo-Advisor and other technology enhancements to the financial services industry. Hoaglin explains that although more and more people are getting more comfortable with technology, many still feel the need to connect with a financial professional. By using a combination of face-to-face, real time meetings with their financial professional, along with technology enhancements, the client is receiving the highest level of active service and attention.

Let me try to illustrate this in a different way. On January 15, 2009, Chelsey Sullenberger, Captain Sully, landed the US Airways plane, flight 1549, on the Hudson River saving all 155 lives on board. During the investigation, computer algorithms could not match the human reasoning for landing in the Hudson rather than nearby airports. When the human factor was added to the scientific data, the “What if?” decision was validated. The truth is that the plane would have crashed attempting to land at both airport options that the technology offered. The human element validated Sully’s decision to make the unprecedented landing on the Hudson River, sparing all lives on board.

The “What if?” Needs to be Part of Your Value Proposition

Very different than the way business has been done in the past, financial professionals have to approach their practice in a new way. In the past, many financial professionals would focus attention on the numbers and selling product alone. Today we are in much more of a relationship driven business. Financial professionals are looked to for their counsel and expertise in planning and navigating the financial markets. Building and maintaining relationships with clients is more vital than ever. Technology is a resource. It is not a replacement for the value a financial professional brings to the table. This must be part of the value proposition for every financial professional.

When my kids want to go out we always ask the 5 W's, Who, What, When, Where, and Why. The 5 W’s can be a simple way to navigate analyzing your practice and creating change.

• Who – Who is your ideal client? Who is your primary client today?
• What – What do you do? Do you have any specific specialties? What technology resources do you use to make doing business with you easy and different? What is your value proposition?
• When – When and how often do you make contact with your clients? This would include review meetings, client appreciation events, seminars, newsletters, among other points of contact.
• Where – Where do you do business? Do you use technology to do business remotely?
• Why – This is the most important. Why do you do what you do? What is your mission statement?

The Financial Professional’s Role in Today’s Marketplace

Taking the time to answer these questions, in addition to acknowledging how technology fits into your practice is critical. On that day in January 2009, the collaboration between technology and the human’s reasoning ability, saved 155 lives. Financial professionals who can find this balance will be able to hopefully change and improve the lives of their clients, one meeting at time.

This is the “Why?” behind the “What if?” To be successful in the financial services industry today, you must become comfortable with your new purpose.