Could Financial Advisors Go The Way Of The Traditional Camera?

WASHINGTON --Nearly every hand in the room shot up after Robert DeChellis asked who had the capability to take a picture of the person sitting next to them.

DeChellis, chairman of the Insured Retirement Institute board of directors, was making a point about the traditional camera. The point was a simple lesson in the brutal pragmatism of the free market system.

"Price is important in the absence of value," DeChellis told the group gathered for the IRI Government, Legal and Regulatory Conference 2017.

To complete the story,  he said traditional camera sales have declined by double-digit percentage points every year since the iPhone was introduced in 2007. Today, nearly every phone sold can take pictures and any companies still making cameras are niche businesses at best.

There is a "very good reason" to think financial advisors will be next, DeChellis said. Clients today have access to low-cost roboadvisors and Vanguard funds, and virtually free asset allocation and money management.

Why would anyone hire a financial advisor in 2017, asked DeChellis, president and chief strategist for Allianz Exchange.

"This is the most severe threat our industry has ever been under," he said. "There will be big winners and there will be very, very, very big losers."

The winning advisors will figure out their advantage -- the personal touch -- and capitalize on it, DeChellis said. He explained the four components of a relationship that former FBI agent Jack Schafer wrote about in his popular book The Like Switch: Proximity, frequency, duration and intensity.

"You can't serve a client if you don't know the details and the intimacy of their personal situation," DeChellis said. "I would love for the financial advisor to be analogous to the CFO for a family. You think the CFO for a family is going to lose an account to a roboadvisor?"

DeChellis closed with a story about playing golf with Hale Irwin, one of the best professional golfers during the 1980s. Irwin won three U.S. Opens, considered the toughest test in American golf.

DeChellis has played three rounds with Irwin, and recalled a round in Minnesota on a brutally hot day. Following the round, Irwin declined an offer of beers in the clubhouse and headed to the driving range.

"His caddy said Hale Irwin goes to the driving range after every round that he plays," DeChellis recalled. "He hits balls for an hour to an hour and a half and works on every shot he thought he hit poorly. He's done that for his entire career."

And that is the dedication and commitment that the financial advisors who survive and thrive will need, he added.

"I'm going to assume that if you've chosen this as a career, you're passionate about it."

 

 

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com.

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