Why is transparency integral to growth?

Today, technology is a way of life and information is everywhere, literally in the palm of our hands. And one trend is here to stay: To enhance competitiveness and drive greater growth, the financial service industry needs to rethink, redesign and rebuild from the ground up to provide greater transparency, simplicity and greater choice.

More empowered consumers = more responsible manufacturers

At a rapid pace, our industry is evolving as consumers continue to become better informed in an increasingly complex market. And now, they not only seek guided advice, they demand unbiased advisors who put their best interests first. The democratization of financial services means that transparency is no longer a“nice-to-have.” It is an absolute “must-have.”

Transparency is essential for earning trust with consumers and successfully growing and developing one’s business. This is the intersection of important secular trends:

• Consumers are more empowered. Technology continues driving a secular transformation of the industry, shifting control from manufacturing and distribution directly into the hands of the consumer. Consumers have zero tolerance for complexity, obscurity and conflicts of interest.
• The financial industry is shifting from commission-based sales to fee-based and fee-only advice. This is changing the way products are manufactured, priced, distributed and purchased. And it’s changing the way that advice is being delivered.

The democratization of financial services means that transparency is no longer a“nice-to-have.” It is an absolute “must-have.”

How to achieve greater transparency in your business

Product manufacturers, advisors and the clients they serve are already evolving in the direction of more transparency, simplicity and greater choice—and the trend is likely to increase. Those businesses who fail to provide greater transparency are likely to go extinct.

The next fundamental question is this: How can advisors achieve greater transparency and use of technology to add value for their business and the clients they serve?

1. Test New Technology and Enhance Accessibility

Now more than ever, advisors need to test out new tools and embrace technology. The most successful ones remain forward thinkers, open to change and innovation. The biggest opportunity for advisors is investing in their technology. One interesting side effect of technology is that clients can now track their investment performance by the minute. Ensuring that clients have better access to their preferred tech tools must be an option so that you don’t inconvenience your clients. In order to build a durable franchise for the future, you must continue to adopt and integrate with whatever new technology your clients are using. But remember that in the end, people still want to talk to real people behind the technology.

2. Tell the Whole Truth and Nothing But…

The Department of Labor fiduciary ruling heightened the demand on financial advisors and broker-dealers to serve their clients with greater transparency and greater value. That’s why it is important to have your compliance in order with all the necessary disclosures in place. By tracking the advice they deliver and providing proof points, such as offering a fully compliant suite of solutions for portfolio management, document management, client communications and customer relationship management, advisors can help enhance transparency.

3. Identify Your Value-Added Differentiator

Whether you focus on niche specialization, adopt better technology to scale and grow bigger, grow through mergers and acquisition, or something else, you must determine what your value-added differentiator will be over the next 10 years. When you find and identify your differentiator or niche, you become the expert and can pursue a greater understanding of that niche. By doing so, you are constantly evolving and learning, and in turn, providing your clients with the best value-added, transparent advice and solutions. Added bonus: Your clients see exactly who you are, what you think, and can select you based on a real analysis of your investment philosophy. In an industry where the only constant is change, an advisor has the best chance to remain relevant to clients and the best chance to remain competitive when the have their value-added differentiator in place.

4. Incorporate Transparent Communication

Advising is about building relationships and trust through transparency. With frequent and effective communication, you will be able to retain clients—and create ambassadors for your practice. You and your team should be focused on “high touch” communication, meaning frequent and timely interactions. Whether it is face-to-face or by digital means, satisfied clients are happy to pay you more and refer you more often.

5. Keep Your Priorities in Check – The client is the number one priority

At Jefferson National, we have always believed that RIAs and fee-based advisors are a powerful force, working to drive change and disrupt the status quo by supporting a movement to greater simplicity, transparency and choice, fostering the creation of new business models—and ultimately creating greater value. And when advisors sit on the same side of the table as their clients by putting their best interest first, everyone wins.

Want to know more? Mitch Caplan will be taking part in the Investing in Innovation Panel, at the upcoming FundForum NextGen Distribution conference, taking place in Boston 25 - 27 October 2016.