“It is very difficult to make predictions, especially about the future.”

– attributed variously to Yogi Berra, Mark Twain and physicist Niels Bohr

Why have so many companies that were seemingly insurmountable players 25 years ago, when Investment Executive began publishing, run into tough times – in some cases, disappearing from the scene entirely? And, most important, how can financial advisors avoid the same fate?

We all can name those struggling companies: manufacturers Eastman Kodak Co., U.S. Steel Corp. and, of course, General Motors Corp.; computer pioneers Digital Equipment Corp. and Wang Laboratories Inc.; Canadian retailers T. Eaton Co. Ltd. and Woodwards Stores Ltd. Even companies that not long ago were seen as being innovators have foundered – think: Dell Inc., Blockbuster LLC, Palm Inc. and Motorola Inc.

This corporate shakeup is part of a broader pattern of once dominant companies seeing their positions erode. Indeed, success today is less and less likely to be a predictor of success tomorrow. For example, half of the companies on the Fortune 500 list in 1995 were not on the list 12 years later. Compare that change with the Fortune 500 list in 1965: it took twice as long to see the same number of companies drop off the list.

Although specific circumstances vary, what those previously successful companies have in common is failure to adapt quickly and aggressively enough to change. In fact, because success often breeds complacency, the roots of tomorrow’s failure lie in today’s success for many companies.

The harsh reality is that we have entered a world in which consumers make decisions less and less on the basis of yesterdays’ relationships and increasingly on the basis of today’s value. It’s not that relationships are completely unimportant; it’s just that they’re much less important.

National Football League Hall of Fame coach Vince Lombardi was known for his expression: “Winning isn’t everything; it’s the only thing.”

In the world we have entered, we can adapt that expression to say: “For successful financial advisors, delivering outstanding value to clients isn’t the most important thing; it’s the only thing.”

So, given that value will be top of mind for clients, here are six guesses on what life in the financial advisory business might look like 25 years from today:

– Financial advice will have evolved into a dedicated discipline, like law and accounting, with a dedicated academic course of study, mandatory internships and greater continuing education requirements.

– The dominant practice model will be total wealth management, in which wealth advisors help their clients understand the financial implications of decisions in their personal and business lives, counselling clients regarding trade-offs and alternatives and helping to integrate tax, estate, liability hedging and cash-flow considerations into decisions. Some advisors will become trusted family-wealth advisors, providing advice across generations on issues ranging from educational alternatives to charitable-giving strategies and options for assisted living.

– Online robo-advisors will be universally used for basic financial planning and investing by Canadians in relatively simple situations, as discount brokers add a strong automated financial planning and advice component onto their front ends. At the same time, most clients with complex needs will rely upon wealth advisors to help quarterback these clients’ finances. These advisors will interact with their clients frequently regarding their most important decisions, using online tools for financial planning and routine interactions. Behavioural finance concepts, such as defaults, buckets and pre-commitments, will be mainstream tools to help clients stay on track. Gamification concepts will be used to upgrade knowledge and reinforce behaviour.

– Technology will be embedded in every aspect of clients’ lives, and wealth advisors will regularly meet with clients via video to answer questions and update progress; due to congestion and travel time, face-to-face meetings for many clients will be limited to once every two to three years or not happen at all. At the same time, the desire for human interaction will lead to the return of investment clubs and some wealth advisors will build their practices as investment club moderators.

– Intermixed with sole practitioners and mid-sized firms will be large, nationwide partnerships and a clear path for progression from entry level to partner. These partnerships, much like those within accounting and law firms, will rely upon leveraging the billable hours of associates to help drive firm profitability. And most advisory firms’ partners will have relationship-management responsibility, although they will be able to refer clients to specialists within the firm or at boutiques for issues requiring highly specialized expertise.

– As clients struggle with the volume of choices, a trusted brand will be paramount. The chartered financial consultant designation will become the recognized global wealth-management credential. Partnerships will include wealth strategists who spend much of their time building the firm’s online profile. Traditional advertising will continue to decline in effectiveness, with reputation, user reviews and peer-group ratings being the dominant methods for the selection of financial advisors. Furthermore, a strong brand will be critical for success. Reputation will be the single most important asset for advisors and their firms. The most successful advisors and firms will have compelling brands within their target communities.

To deliver value to clients in this kind of environment, advisors will need to have exceptional expertise. The most successful advisors will operate at the highest level of professionalism, ensuring that they’re in the forefront of their specialty and are delivering compelling client value. Successful advisors also will need outstanding soft skills in dealing with clients and staff. That’s one reason why women will make up more than half of partners at many of the most successful firms. And, finally, exceptionally successful advisors will be those who resist the impulse to stand pat; rather, they will embrace change and constantly innovate and adapt to the shifting landscape.

All of these qualities are important – but perhaps none more so than being open to innovation. Worth noting is that the market leaders that disappeared from the scene did so not because of a failure to try to change but because those attempts came too late, when their businesses were on a downslope and they were fighting negative momentum. The time to change is when you are in a position of strength, not of weakness.

Whether you agree with all, some or none of these predictions, now is the time for you and your team to begin to position yourselves for the future. In fact, some of you may have started already.

The past 25 years have been a great ride for this industry. And, provided that you are willing to make fundamental changes in your business, the next 25 years promise to be equally interesting and rewarding.

© 2014 Investment Executive. All rights reserved.