The summer period not only allows us to recharge but also creates space to take a step out of the day-to-day and reflect.
Over the summer, I was involved in a late-night wine-fuelled discussion about Elon Musk and what would happen if he applied his thinking to other industries. Inevitably, this led to what he would do to financial planning.
Musk is not only divisive, but practices rarely-used first principles thinking. He’s not unique in this, Jeff Bezos, Einstein and others do the same, and it’s based on the idea you break down problems into their fundamental truths and then rebuild them from the ground up.
If you think about Elon Musk and SpaceX, he didn’t start by thinking about how much money he needed to buy a rocket, he looked at the fundamentals of what was required to create a company that could sustain rocket launches at a fraction of the cost.
If Elon Musk applied his thought process to financial planning, what would he create?
By working through three simple steps of (1) challenging every assumption (2) breaking problems down to their smallest parts and (3) rebuilding from the ground up, Musk and others are challenging the norm. This “think big” mindset is driving innovation and change and creating the industries of the future.
So, if Elon Musk applied his thought process to financial planning, what would he create? For me, this could provide the blueprint for the future financial adviser, and this is driving what we are building to support advisers. I believe there are five key elements to this future.
1. Frictionless advice process
We estimate that 80% of the current inefficiency in the advice process can be removed. Rather than chipping away one process at a time, there is an opportunity to take one giant leap towards this. Removing friction increases productivity, giving more capacity to support more clients.
We will reach the model where there is seamless straight through connectivity with the providers and tools needed to support a client. No rekeying, no jump offs, no call waiting. Seamless, connected data and experiences and more time for an adviser to work on the things that add the most value.
2. Every client has a “plan in their pocket”
Every element of our lives is now contained on the phone in our pocket. 95% of adults now own a smart phone, and almost every service we interact with is now digitally connected.
The financial picture of a client will bring together every aspect of their plans in real time and on demand
Our financial life and plan should be similar – connected and updated in real time, available 24-7, not once a year at an annual review. The financial picture of a client will bring together every aspect of their plans in real time and on demand.
3. Fully flexible advisers
Gone will be the days when financial advisers’ jobs are office based, 9-5, five days a week. Other industries have solved the supply and demand dynamics by enabling connected experiences that match the supply and demand.
Take healthcare, where I can now digitally connect to an expert, where I need them, when I need them. A healthcare professional who may only want to work certain days or hours can match their availability.
This solves the supply challenges where an adviser can work in a way that suits their lifestyle. If the technology can enable an adviser wanting to work more flexibly, there will be an ability to match the client demand to the adviser capacity.
4. Wellbeing and coaching led experiences
We know that the “guide” element of the financial planner is the part of the process most valued by clients. However, currently most of the focus is around the “mechanical” part of the advice process and the technical solution.
Ed Dymott: Are you the mechanic or the guide?
There is great Musk thinking here with the Tesla. Traditionally, if you wanted a faster car, you needed a bigger engine – and ultimately a new car. A Tesla now can achieve better performance with a software upgrade received wirelessly over the internet.
With financial planning, the mechanical part of the process will be automated with similar upgrades expected to happen seamlessly. As this happens, financial planning will shift towards building better, guide-led experiences. Wellbeing and coaching will become the lead part of the experience.
5. Building the true business in a box
Many advice practices find sourcing the right technology and support services a frustration due to cost, lack of integration and poor service.
The future will see an adviser being able to fully work with a turnkey business in a box solution, which connects all their support needs. This will mean rather than having to assemble the component parts themselves, advisers can lean on organisations that bring all aspects of what they need to run as a practice together in one place.
Financial planning will shift towards building better, guide-led experiences. Wellbeing and coaching will become the lead part
To follow the think big mindset of Elon Musk, you would start with a zero operations mindset and think about how you would eliminate the need for any other support in your office.
The good news for our profession is that Elon Musk, in his endeavours to create new power supply systems, a global social-media powerhouse and multi-planetary existence, has not turned his hands to financial planning – yet.
However, there is a challenge for all of us. Someone will be thinking bigger, and this will be the winning model in the future.
Ed Dymott is chief executive officer at Benchmark Capital
