As firms and financial advisors continue to adjust to working remotely during the coronavirus pandemic, they may be warming up for more flexibility around work-from-home arrangements even when the crisis is over, industry watchers say.
Marina Shtyrkov, a senior analyst at Boston-based research firm Cerulli Associates, says there are potential benefits to working remotely, including those that allow advisors to target more clients. She expects the industry to evaluate how to provide “relationship-based advice from anywhere, anytime.”
Derek Notman, founder of Intrepid Wealth Partners, converted his entire practice into a “virtual financial advisor” nearly six years ago. He says the current work-from-home arrangements will likely be considered an alternative rather than a replacement for the traditional face-to-face manner in which most advisors conduct their business. The Madison, Wis.-based Notman manages close to $50 million in client assets.
Why working remotely works
1. It’s cost efficient
Notman says he slashed 75% of his costs when he switched to a virtual practice and cost savings can be passed on to clients.
“There’s definitely fewer costs if you do go digital, because you don’t have to lease an office space, you don’t have to think about some of those other expenses that come with having a physical location,” says Cerulli’s Shtyrkov.
2. It increases an advisor’s reach
Shtyrkov believes having a virtual practice opens up a lot of possibilities, “but it requires firms and advisors to change their thinking.”
Challenges may arise for advisors who are limited to clients in a small town with fewer potential clients or in a highly populated but very competitive location, Shtyrkov says.
When advisors aren’t tied to a physical location or a geographical coverage area, they can expand the types of clients they serve, she adds.
Justin Castelli, founder of RLS Wealth Partners, believes advisors will leverage technology even more, given their firms’ pandemic response. The Fishers, Ind.-based RIA had $35 million in client assets as of last year.
“I think in the future, maybe more people [will be] leveraging this type of technology to make business models more efficient — maybe it lets them work across state lines and with clients out of state,” he says.
3. It’s convenient for FAs and clients
Intrepid’s Notman says eliminating long drives or the need to carve out time amid typically busy schedules benefits both advisors and clients.
“You’re going to love it because it gives you the kind of freedom that you need to operate whenever you want,” says Jim Cannon, founder and CEO of Phoenix-based RIA Dynamic Advisor Solutions.
Drawbacks of working remotely
1. You still need an office
Advisors who work remotely still need a dedicated office space. And they will also need to invest “a few thousand dollars" in hardware, such as computers, screens, webcams, laptops and mics, among other things, says Cannon.
For firms that may implement work-from-home arrangements beyond the pandemic, the cost would be multiplied by the number of advisors who take this option.
Cerulli’s Shtyrkov believes the pandemic may push firms to prioritize technology support, such as video conferencing, for advisors.
2. Not all clients are technology savvy
Certain clients are afraid of technology or resistant to use the digital tools already available to them.
RLS’ Castelli says some clients, such as retirees, are “probably still going to want to come into the office rather than lean on using Zoom.”
Kevin Sanchez, past chairman of the Investments & Wealth Institute, told FA-IQ previously “the best thing” to do is make the additional technology options available to clients.
“But if they want hand-holding individually, a phone call, an email, something easier than learning a brand-new application, if they’re really a good relationship, you give it to them,” he says.
3. The potential for feelings of isolation, miscommunication and work-life balance issues
Some advisors, especially the more social ones, may develop “stir crazy” feelings when working remotely, cautions Dynamic Advisor Solutions’ Cannon.
“You’re going to have to plan your day in a way where you can get that social one-on-one, live interaction with a human being somewhere else,” he says. “Just having a webinar or an online session where you’re looking at a client, it’s not completely the same as being in the same room with a human being.”
Communication among advisors and teams may also suffer if left unchecked, Cannon says.
“Sometimes they have difficulty understanding why things are not getting done by their assistant who’s remote, and it tends to be because there’s not good verbal communication,” he says.
Work-life balance may also become strained if advisors don’t draw the line when working from home, according to Cannon.
Some “can’t let go at all from the business and they struggle trying to find the right balance,” he says.
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