Very good points @Efi and @paolo.sironi
Based on what we are seeing, most of the market will not need either “distributors of products” or “packagers of advice”.
The advisors will be paid based on their role, which is changing. Up until now they have been the distributors of products, so their compensation structure reflects that.
The distribution of products is becoming easier and more streamlined. The advice (which was never the strong point of current ‘sales people’) is in the process of being streamlined too.
1. ‘Advisors’ as providers of advice(1) will keep doing the same: provide custom advice for a small niche of those with complex financial situations. No conflicts of interests here and no vagueness about their compensation. Many will move down on pay ladder and offer fixed fee “hand-holding” services to those who need an actual human before pulling the trigger.
2. ‘Advisors’ as ‘product distributors’ will be all but gone. I won’t bet on when the transition will be completed, but I just don’t see how their services to help select and buy products can be justified 5-10 years from now, where more advanced systems and processes enter the marketplace to satisfy that same need faster, cheaper, easier (2).
(1) - not just ‘KYC + portfolio recommendation advice’, but comprehensive advice covering every aspect of life.
(2) www.Perfiqt.com is one of those advanced systems. It could offer a good glimpse into a possible FUTURE since we have an extremely high engagement rate of 53% pointing to a true mass market appeal. People care about LIFE today and they want to make sure they don’t screw up their LIFE tomorrow. They don’t care about financial products, advice, financial plans, budgets…
Perfiqt puts their LIFE in focus and uses gamification to help them drive the process of very comprehensive life planning and product discovery at their own pace (no boring form-filling). As a result, we don’t have to ‘sell’ anything or tell them what to do (advise) - they discover the need and ask for products themselves.
Our paid services include advisor help, but only 40% actually opt for it and they mostly need just “hand-holding” support. The fee is small so clients love it. Advisors love it too since they get incremental revenue with little work. Clients with more advanced needs get escalated to a more involved work with an advisor (small niche).
I think that’s where the market is going and it’s the consumer who’s driving this change (the only heavy-enough ‘object’ to impact the whole personal finance ecosystem). We can try to fight this, or just help them get there.