David Feldberg has been paying attention. The Managing Director of DFSIN’s Ottawa Financial Centre believes that in change and disruption, there is opportunity. He’s choosing to seize that opportunity by hiring the financial services advisors of the future today.
“There is a lot of change that is occurring right now and a lot of change that is coming,” David says. “Artificial intelligence is here and consumers will be interacting with A.I. long before they reach the point where they’ll want to interact with a human being in our business.”
DFSIN is the Desjardins Financial Security Independent Network.
David owns and manages the Ottawa Financial Centre and has recently taken on three centres in the Maritimes and one in Quebec. The Centres help both businesses and individuals with financial, retirement and estate planning, including their insurance needs, mutual funds, savings and investments. The expansion of his own responsibilities come as a part of a larger trend David is seeing in the financial services industry.
“We have prepared for disruption by ensuring that we’re adding value for our customers and being transparent. Clients are going to become more demanding and we need to show clearly, now more than ever, how we add value,” David says. “Customers will want to know: ‘What’s the value of what I’m getting? and ‘What are dollars and cents costs for doing business with your firm?’ “People will be more selective about which firms and which advisors they do business with as they will be better able to compare us. It will evolve into something that is much more positive.”
According to David that change is exciting because, in some ways, it is overdue. His perspective is based on years of working in financial services and financial planning. He is also a proponent of lifetime learning and good research. The financial services advisors David is hiring now should expect to attend regular industry conferences and participate in research-based study groups so they can keep up to date on industry trends and changes. There is good reason for that emphasis on on-going education.
By its nature, financial planning is a highly-competitive industry, but one that is dominated by a few large players that have seen no new upstarts enter the market. The period of consolidation, the stage that saw medium-sized and larger firms merging together, while smaller and independent players just disappeared, is over.
“Regulatory changes have created barriers to entry,” says David. “Very large banks or insurance companies with established distribution channels are the only players. It’s the sign of an industry that has reached its maturation.”
Maturation is the point in the development cycle of industries where the period of rapid growth has passed. The continuation of sales growth, and profits, might be stable – for time – but there just isn’t the room for massive growth. Mature businesses still weather changing conditions in the economy or in terms of technical development. They also generally have expertise available to predict how the pool of customers or “market segments” can change over time according to demographic might, social movements and attitudes and the influence of external factors such as job security and exposure to natural disasters or large-scale tragedies. Disruption, though, comes from huge social changes that are supported by access to technological tools that can remove specialists or experts from processes or transactions. That’s the step David and his DFSIN colleagues are readying for.
“You can’t keep doing the same thing over and over again and think that you’re going to stay in business,” David says. “The advisors who have embraced change and embraced the opportunity to learn have done well. The gap has been growing for many years between the successful advisors of the future and those still holding on to the past.”
The opportunities available are huge and about to get bigger. At the moment, the average age of financial advisors working with mutual funds and investment products is late fifties. And on the independent insurance side of the business, it is late sixties.
“People have long careers in this industry. You just have to be willing to do the little things really well. The successful advisor is willing to do the little things that the unsuccessful advisor is unable or unwilling to do,” David says. “They are hungry, they act in the best interests of their clients and they are consistent in delivering on promises. Great people do ordinary things very well.”
The firm has been selectively hiring the right candidates but, David admits, it has been getting more and more difficult to find them. While they have been doing on-campus recruiting through internships, they are also looking to attract 25 to 40 year-olds who are looking for a career change because they either want a new challenge or have hit the ceiling in terms of salary or advancement in their current positions. People starting a new career later in life who have has previous success and shown a commitment to life-long learning and embracing new experiences are also among the talented candidates David and his team hope to develop.
“There’s this perception that you have to have a degree in economics or business to be a financial services advisor,” David says, “but I often think it’s a degree in psychology that can help the most. It’s the willingness to understand people and the desire to help them over the long term that really counts.”
According to David, the successful advisors of the future will need to have the the skills of a teacher and excellent communication abilities. While there is mounting evidence that AI will impact some of the solutions available to consumers in taking care of their financial needs, David believes that the need remains for skilled analysts and educators who can add the human touch.
“There is definitely a financial literacy gap in this country,” David says. “So trying to educate the consumer is first and foremost. That’s why these robo-firms can be so disruptive to the process. Customers can manage their financial education at their own pace while some humans can complicate issues, rather than simplify them. We need people who can be an expert in taking complex and technical financial concepts and communicating them in simple, effective terms. Even more, consumers will need to rely on professionals who can help them manage their behavioral tendencies that are often detrimental to their success. That way even those with the most basic knowledge will be better equipped to deal with their individual financial issues.
But even as he prepares his firm for the future, David knows there are central teachings from the past that will serve everyone moving forward into the future.
“My dad was a great mentor. He had me investing money since I was about 13. He had a family business and he had us making investments for our retirement since we were kids. He always said that ‘a fool and his money are soon parted,’ so I learned to respect money at an early age,” David remembers. “I’ve grown on from that. You know, a lot of people are concerned about reducing costs and budgeting as they should, so they spend a lot of their intellectual capital trying to figure out how to save a nickel. Everyone can figure out how to save a nickel, but only a few of the wisest can figure out how to make a dollar.”
If you want to join that group of wise forward thinking people who do well by those they serve, David Feldberg would like to talk to you about becoming a financial advisor.
Kate Baggott's technology and business journalism has appeared in the Technology Review at MIT, the Globe and Mail, Canada Computes, the Vancouver Sun, and on the Business to Business News Network
Kate is the author of two short story collections.