Advanced Markets of Tomorrow

Evolving business models, regulation and consumer demands are transforming the financial planning landscape

Advanced Markets, often considered the next-level sales catalyst for high performing financial professionals, is undergoing a remarkable upheaval. An evolution in business models, regulation, technology, and consumer demands have transformed the financial planning landscape. This threatens to open a chasm between Advanced Markets and those who rely upon them. An understanding of this disconnect and a grasp of measures necessary to close this growing gap are key to sparking the transformation necessary to meet the needs of tomorrow’s financial professional.

Evolution of the financial professional business model

Financial professionals and their firms have had to become increasingly diverse and sophisticated –recognizing that a narrow focus on a single financial product fails to meet the expectations of today's clients.

The business models of financial professionals are converging as they seek to best meet the evolving needs of today’s clients. This merger is further accelerated as the compensatory models of commissions, sales charges and fees remain under constant scrutiny by regulatory forces geared towards consumer protection. The result? Many financial professionals are trading in their “all eggs in one basket” approach for the “covering all my bases” method. Rather than paying lip service to comprehensive wealth management, they are increasing their own financial aptitude while looking to partner with other firms that may be able to compensate for their missing areas of expertise. Creators of life insurance and investment products are seeking strategic partnerships, and broker-dealers are taking on hybrid compensation arrangements.

Increased industry regulation

The regulatory environment that has morphed over the last decade through the U.S. Securities Exchange Commission’s (SEC) Regulation Best Interest (Reg. BI), the Department of Labor Fiduciary Rule, New York Regulation 187, and a dizzying array of similar state guidance, all converge with comprehensive financial planning and transparency top-of-mind for both federal and state regulators. While it likely doesn’t mean the end of commission-based compensation, it’s safe to conclude that this shift is permanent and will continue to evolve. Compensation is likely to become a mixed bag of fee and commission models for years to come.

Financial professionals have had to become more diversified and educated, while applying a multi-disciplinary approach as they reinforce their practices with the three Cs: commoditization, consolidation, and fee compression.

Financial professionals are now in the center of their client’s universe

Separating clients’ needs is key to understanding their growing expectations. There is a clear gap between the services clients expect and what financial professionals provide. Clients now put their financial professionals in the center of their economic universe and look to them for things beyond just insurance and investment planning. Put simply—clients are expecting more.

Financial professionals have attempted to close this gap, but their resources are limited. Wealthy investors are no longer willing to juggle multiple professionals to meet their different needs and instead, are seeking out a single person that can coordinate the full gambit of planning services on their behalf.

What single financial professional can provide consultation on educational planning, property and casualty insurance, trust services and business succession all in one breath? Rather than attempt to be an expert in every discipline to meet every possible client need, financial professionals should consider forming partnerships to amplify their impact. This is where Advanced Markets can play a pivotal role.

A disconnect in the support model

Most Advanced Markets departments focus on protection product consultation through executive benefit, business succession, or estate planning. While this business-minded approach is at the core of Advanced Markets, something in this strategy often gets overlooked – it accounts for the business need but fails to address the personal need. At Midland National and North American, our well-rounded team can help solve for both at the same time.

The Advanced Markets space is changing. Clients are expecting more of their financial professionals. To stay relevant, financial professionals, and the Advanced Markets teams they work with, need to adapt. The financial professionals and Advanced Markets teams of tomorrow will find success by identifying gaps in consumer expectations and filling them with more value through comprehensive solutions that take all the needs of a client into account.

Learn more about partnering with the Midland National or North American Advanced Markets team.

Nothing herein should be construed as legal or tax advice. Please advise clients to consult with and rely on a qualified legal or tax advisor before entering into any financial planning strategies.

The views and opinions expressed by Andrew Rinn are his views and opinions as an individual and do not reflect the views and opinions of Midland National® Life Insurance Company or North American Company for Life and Health Insurance®.

Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including North American Company for Life and Health Insurance® and Midland National® Life Insurance Company. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, North American Company for Life and Health Insurance and Midland National Life Insurance Company.