Is social distancing changing the way clients and prospects are working with financial advisors? Meeting face to face is no longer an option in many states. That leaves the telephone, email, and social media. Financial advisors who have embraced digital marketing as part of their overall communication and content strategy will have an easier time adapting.
We hope the government is right, that the number of new coronavirus infections will start a steady decline beginning in late April.
We hope more existing drugs, that treat the virus’ symptoms, will be approved over the next couple of months.
We hope the virus will become another strain of the seasonal flu. It will be highly contagious, but with a low hospitalization rate, and an even lower death rate.
We hope social distancing will flatten the curve and newly approved drugs will make the virus’ life-threatening characteristics more manageable.
We hope the world around us has not become a hostile environment.
We hope the vaccine, that is 12-18 months away, will provide the protection we are all seeking.
It is only a matter of time before we conquer this disease the same way we conquered polio and the measles. Effective treatments and a vaccine are the two keys to make this virus manageable and no more deadly than the seasonal flu.
12-18 months is a long amount of time to be constantly looking over your shoulder. Months of fear and social distancing will change people’s habits, in particular for the baby boomers who are retired or close to retirement and their parents.
Old habits may die hard, but people can change a lot of old habits in this amount of time. In particular, when the foundation for change is the fear of a disease that is spread by people interacting with people.
For example, they are already replacing human interactions with online interactions. It is already happening with education, doctors, deliveries, etc.
If some form of social distancing lasts for months, millions of Americans will get used to virtual interactions. These interactions will be risk-free when they are conducted by telephone and computer.
Why be exposed to this risk if you don’t have to?
If a doctor’s appointment can be virtual why not an interaction with a financial advisor?
The Old Normal
The foundation of the financial service industry’s marketing practices has been face-to-face since time began. This was based on the personal relationships that were forged between investors and their financial advisors.
The financial service industry was built on a powerful sales culture. That is why 650,000 advisors and representatives sell financial advice, services, and products. Face-to-face has worked for decades because financial advice is a relationship business that is impacted by advisor personalities and sales skills. All too often, the biggest producers in brokerage offices were the advisors who sold the most product and generated the most revenue.
Wall Street’s sales culture has dominated the industry since the 1970’s.
The flip side of this coin is the investors who are used to face-to-face relationships with financial advisors. This is their old normal and it should not be discounted. It will take something pretty extreme to change the way investors buy financial advice, services, and products.
The question is, will the impact of the pandemic be powerful enough to change the way investors interact with their financial advisors?
We believe the answer to this question is a resounding yes.
The New Normal
There will be a new normal that defines the way investors and financial advisors interact with each other. It could be a temporary change or a more permanent change for millions of investors who want to limit their interactions for at least the foreseeable future.
Note the operative word here is interact and not communicate. Interactions determine how advisors communicate.
No one has a crystal ball that will accurately predict long-term consequences.
We do know, right now most interactions are virtual and are likely to stay that way for at least a year or two as more investors demand this type of contact with their advisors. Consequently, more advisors will be adapting to the new normal by meeting the demands of their clients for virtual interactions.
After 12-24 months of the new normal, there is a high probability large numbers of investors will prefer to stay with the new normal because that is what they are used to.
Just about financial advisor in America had virtual servicing relationships before the pandemic. Most of these relationships occurred when an existing client relocated to another state and decided to retain the services of their current advisors.
So virtual servicing is a no-brainer. It is based on existing relationships that already use the telephone and computers to interact with each other.
The real challenge for many financial advisors will not be virtual servicing for current relationships. The real challenge will be virtual marketing. The advisors who are impacted the most will be those who rely on their sales skills to produce revenue for their firms and incomes for themselves.
Sales skills will continue to be important, but their impact will be diminished by what investors see on the Internet.
Virtual marketing is not just converting face-to-face communications to telephone conversations. Most investors are very wary of telephone pitches after decades of calls from boiler rooms, call centers, and aggressive salespeople who are selling investment products for commissions.
The Internet will be the key to success for financial advisors who embrace virtual marketing.
The old way of marketing investment services face-to-face is not even an option at this point. Advisors will have to embrace virtual marketing to grow their businesses. The advisors who already have an online presence are the lucky ones. Everyone else is going to be playing catch-up.