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CIFPs National Conference 2017

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The need for financial planners to focus more on offering holistic financial planning to clients while also building up their knowledge and skills is growing

By Fiona Collie |

 

Financial planners need to prepare their businesses for a deluge of changes resulting from "a real perfect storm," according to Cary List, president and CEO of the Financial Planning Standards Council (FPSC), who spoke at the Canadian Institute of Financial Planners (CIFPs) annual national conference in Ottawa on Tuesday.

Although issues from compressed margins, to clients' demand for instantaneous communication, to the commoditization of financial products are all warning signs of this approaching storm, the two biggest factors, said List, are regulatory change and technology.

Financial planners who hold the certified financial planner (CFP) designation managed to weather the implementation of the second phase of the client relationship model (CRM2) well, he noted, because of the value-added services they provide to their clients. As well, the potential of the introduction of a best interest standard could prove to be a positive change for financial planners who hold the CFP, as they are held to a similar standard.

However, the current level of uncertainty around the regulation of financial planning and advice has resulted in a few clouds gathering on the horizon for financial planners and the financial services sector as a whole.

"It's causing a lot of stress and uncertainty on all sides: industry, firms, lawyers, professional bodies, such as the FPSC, and associations such as CIFPs," List said.

Technology, particularly in the form of robo-advice platforms, is also resulting in significant change in the financial services sector and in how advisors do business. For example, advisors whose value proposition has focused around selecting the best mutual funds or insurance products may, in fact, find themselves at risk of losing business and clients to a robo-advisor.

To weather the coming storm, financial planners will need to focus even more on offering holistic planning to clients, providing the "human side" of advice while also building up their knowledge and skills in areas in which technology cannot act as a supplement, List noted.

"We're all going to have to redefine what it means to be a certified financial planning professional or other professional in the financial services sector," he said.

For example, financial planners will likely have to become specialists in certain aspects of financial planning and conduct deep dives into clients' financial matters that would be beyond the capabilities of technology, List explained.

Still, it's worth considering that technology, although a disrupter, isn't necessarily always a competitor. In fact, financial planners will have to adopt some technology to help them in working with clients, List said. For example, technology can help financial planners to present ideas and reports to clients in an economical way and to provide more customized solutions.

In addition, the more "human side" of financial planning — such as communication skills, an understanding of behavioural science and behavioural economics, the ability to connect with clients and empathy — are all differentiators that will help advisors weather the storm.

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