Only Time Will Tell For Retail Financial Services

I was recently interviewed by a reporter from wanting my take on the growing number of retailers looking to enter the financial services industry. Notable names like Costco, Walmart and Amazon have rolled out current plans or are publicly discussing their interest in the industry.

Technology has no doubt changed financial services incredibly over the last 10 years and will continue to evolve in the digital age in which we live. One thing that has not changed however is how investors select an investment advisor.  Year after year, study after study shows that the number one factor in selecting a financial advisor is trust – do I trust you?  Money is very personal and this is a trust centered business.  At their core, most people (although there is generational component to this) still prefer the idea of a trusted advisor vs. a salesperson at a large retail hub – especially when it comes to something as personal and important as their financial goals and resources.  To be successful, trust will be a major hurdle these retailers will have to overcome.

Think for a moment about buying a house. Studies show that most buyers now find the home of their dreams through online searches –no longer relying solely on a realtor to find “the” home for their family.  However, once you’ve found that perfect home online you want to see it, walk through it with a professional, ask questions, look at comparable properties and ultimately have an advocate to help you navigate the negotiation and closing process.  For these services, most individuals still rely upon a realtor.  The idea of a trusted professional with experience still rules the day when things get serious.

The phenomenon of the “robo-advisor” is a fairly new concept, which means that all of the major players have yet to experience a bear market! Many investors I talk to these days wouldn’t dream of hiring an advisor that wasn’t around in the 2008-09 bear market – they want an experienced professional.  It will be interesting to see how the “robo” segment of the industry does during times of market duress.  And perhaps more importantly, how their clients react.  It’s worth noting that several “robos” have been criticized for actually locking people out of their accounts online during days of extreme market volatility.

At Unified Trust – we strive to deliver a lot more than traditional investment management. Yes, we’re going to manage investments as a true fiduciary.  Yes, we’re transparent in our billing and create a culture of trust with our clients.  But more importantly, we want to actually help people accomplish their financial goals and monitor their progress.  It is this marriage between investment management and accomplishing financial goals that will separate the commoditized investment management business and true wealth management that focuses on client outcomes.

Here’s a link to the full article if you’d like to learn more.

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