How the pandemic has changed the financial advice business

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Working remotely in a business built around relationships means adapting in more ways than one.

For most financial advisory firms, the pandemic accelerated advancements already underway in virtual communications and paperless transactions.

The best businesses maintained their personal connections with clients and safeguarded customer data at the same time.

“We are now fully in the cloud,” said Matthew Young, president and CEO of Richard C. Young & Co. in Naples, Florida.

For the most part, the transition to operating entirely online has been beneficial for clients and their advisors, particularly with electronic paperwork. “It speeds up the process,” Young said. “We can track it easier and it gets to the client instantaneously.”

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Virtual communication is now an essential part of client service at Salem Investment Counselors, as well —even though Zoom calls are not always better for business.

“Our clients want to see us; it’s good to get face to face,” said David Rea, president of the Winston-Salem, North Carolina-based firm.

However, less time on the road means more time to consider other much needed changes, such creating a minority internship program and putting more emphasis on socially responsible, or ESG, investing, Rea added.

“The quiet part of it has let us do some things we needed to do,” he said. “Trying to be more diverse as a firm and focus on ESG has enabled us to do some good things in a difficult situation.”  

Such innovations have helped leading firms bring in younger clients — another thing the industry has historically struggled with — just as the so-called Great Wealth Transfer gets underway. After a decade of stock market and real estate growth, baby boomers are set to pass to their children more than $68 trillion, the biggest generational wealth transfer ever.

Meanwhile, the pandemic has proved that planning for the unexpected is also key. And that makes finding the right investment advisor critical.

For some firms, including California Financial Advisors, this was an opportunity.

“We have gained more younger clients,” said Carrie Hume, office manager at the San Ramon, California-based firm. Hume credits “the fact that we don’t have any cookie-cutter portfolios.”

“Our plans are geared toward individual needs or goals,” she said. And, “certainly, everybody’s goals and desires for their life has changed over the last year and a half.”

During this time, the firm’s assets under management grew to $1.6 billion from $1.3 billion.

Others, too, say the changing environment has given them an edge.

“We focus on quality stocks and bonds, so I tend to do a little bit better during periods of distress,” said Young at Richard C. Young & Co.

“As far as client portfolios are concerned, that tends to favor our strategy.”

(The 2021 CNBC Financial Advisor 100 ranking will be revealed at 8 a.m. ET on Wednesday, Oct. 6.)

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