2018: The evolution of wealth management

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January 05, 2018


A discussion with Mark Jordahl, President of U.S. Bank Wealth Management

 

Over the past decade there has been a seismic shift in the amount of information available to wealth management clients, putting more data and power into their hands. This availability of information, combined with advances in technology, changing client expectations and desires, demographic trends and regulatory changes, are all transforming the wealth management industry. These changes will continue to reap benefits for consumers.

 

1. Technology-driven transformation

 

As in many other industries, technology is reshaping the way wealth management is practiced today. From tools that enhance client-advisor communication to software that makes advisors more efficient and helps clients connect their goals and investment strategy, technology is having a major effect on the wealth management industry.

 

“Technology will be transformational, and we at U.S. Bank embrace this as an opportunity for us and for our clients,” says Mark Jordahl, President of U.S. Bank Wealth Management. “We want to enable clients to do what they want to do, wherever they want and how they want. 

 

 

“One of the most significant trends is how consumers have gained access to products and services through their smartphones,” Jordahl says. “And advisors have tools that help them get to know clients better by creating a clearer picture of the client’s situation. When properly used, these tools can help advisors provide better service.” 

 

While many consumers want and can access information and services online, others want and need human interaction as well.

 

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January 05, 2018


“The industry’s challenge,” Jordahl says, “is to knit together an experience that allows clients and advisors to navigate online, person to person and on the phone in a way that allows clients to engage us on their terms.”

 

2. More comprehensive, multifaceted advice

 

Meanwhile, the wealth management industry is improving at providing more comprehensive advice. As a result, relationships that yield more all-encompassing advice are replacing transaction-based relationships that might have revolved around specific needs and product solutions, such as annuities or mutual funds.

 

The financial planning process is just one example. It used to begin with a formal client office meeting with a relationship manager and a planner and their use of a highly complex computer-based planning tool. After this in-depth meeting, the planner would take some time and produce a comprehensive strategy for the client, sometimes in the form of a bound book. This could sometimes feel like information overload for the client.

 

Today, the easy accessibility of interactive tools allows clients to be more involved in the process and to experiment with “what if” scenarios around basic planning. Clients can choose to do some of that work on their own — and even have fun with it. Or they can still meet with a planner and get as intricate and detailed a plan as they want or need. 

 

3. Addressing dreams and aspirations

 

Similarly, generational wealth transfer is about much more than trust products and estate planning products. Jordahl says, “It’s about client goals, dreams and aspirations.”

 

For people who have enough wealth to potentially make an impact, the focus is on identifying what kind of impact they wish to achieve, defining their objectives and then creating and implementing a plan. 

 

For clients who own a privately held business, the goal may be to sell the business in order to achieve their goals and dreams outside of running a successful enterprise. When U.S. Bank facilitates that sale, it’s with a view that goes far beyond the transaction and addresses client concerns afterward. 

 

“We want to set it up so that you’re in good shape and the wealth expresses your values and works toward your goals,” Jordahl says.

 

4. Beyond universal benchmarks

 

As the asset management business evolves, there’s less interest in traditional measures of success, such as beating a universal investment benchmark like the S&P 500, and renewed interest in providing thematic-based investment products. An approach like thematic investing uses a top-down investment technique that helps clients gain exposure to macroeconomic and social themes and trends through managed investments. Themes might take the form of smart beta strategies, which analyze factors such as low volatility, momentum, quality, value and size; future global trends; or a socially conscious investment.

 

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January 05, 2018


Even socially conscious investing has seen a shift from focusing on avoidance of so-called sin stocks, such as tobacco companies. Now there’s a look toward identifying companies that are socially aware or progressive and consequently are rewarded for their good stewardship.

 

In general, the trends continue to point away from one-size-fits-all solutions and toward greater complexity, nuance and client sophistication.

 

5. Greater client sophistication

 

“We’re supporting our clients as they become more sophisticated in the world of finance, investing and estate planning,” Jordahl says. 

 

“We see clients with a higher level of financial IQ. They cast their net more broadly for insights, and then they come to us and bounce these ideas off of us as they search for the best answer possible. 

 

“We can help them throughout their entire financial life cycle, from leveraging up early on, to saving for retirement and ultimately to transferring wealth to the next generation or making a global impact through philanthropy.”

 

 

6. Regulatory changes

 

And then there’s the major regulatory change that is about to reshape the investment industry. The Department of Labor is requiring all financial professionals to provide a fiduciary level of service if they work with or give advice on retirement plans. The change, which will go into effect fully on July 1, 2019, is still somewhat in flux, but it reflects and supports the trend of putting client needs first and acting in their best interest. “We support the spirit of this change, as it results in positive changes for consumers,” Jordahl says.

 

Exciting time for wealth management

 

“Overall, it’s an exciting time to be a client in the wealth management space and to be working in wealth management, given the opportunities to leverage information, technology and more comprehensive and multifaceted advice,” Jordahl says. “We’re seeing client benefits today that we couldn’t have imagined even a decade ago.” 

 

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