In January, I wrote about the three big themes I expected to see in 2020 (I wish I'd said I expected a global pandemic - I’d be rich).

    No, I didn’t predict the pandemic and I’m not holding myself out as a futurist. However, I believe the issues I identified are still the big three for 2020, despite everything else that’s gone on.

    If you’ve been riding the stormy seas and have got things at least under some control, it might be time to refocus on the important stuff, rather than the short-term stuff.

    Here are three themes I expected to be huge in 2020. I haven’t changed my view.

    1. Vision

    If you haven’t got a clear vision of where you want to be, and what part you want to play in the future financial services world, it’s going to get tough.

    The recent challenges presented by the pandemic, as well as dramatically rising FCA fees and professional indemnity (PI) premiums have only piled on more pressure for many firms.

    Clarity of vision is always the starting point. What's more, you can reset and sharpen up your vision at any stage of your journey.

    I don’t care if you’re 35 or 65. If you own a financial planning business, you’ve got to be working as hard as you can to create a clear vision for your future.

    Don’t get discouraged if you work hard and all you come up with is a five out of 10 vision. Sometimes that’s how it goes.

    But don’t stop there. When your vision isn't as clear as you’d like, keep digging.

    Read more books, listen to more podcasts and seek out entrepreneurs and visionaries in whatever industry you can find them. In fact, it's worth spending more time looking outside the profession than inside it.

    It’s not that someone out there has all the answers; that’s highly unlikely. But what you will gain is a range of different perspectives that will help you connect the dots as to where you want to position yourself for the future.

    2. Experimentation

    The second theme I identified for 2020 is experimentation; and no, I’m not promoting alternative lifestyles.

    What I am promoting though is the need for successful firms to start experimenting with new business models aimed at serving younger clients.

    I’m talking about large, experienced and successful financial planning businesses built on the back of retirement planning and wealth management advice making a deliberate move into new client segments who have less money.

    Insane? Not at all.

    In the US, major and credible industry players like Schwab and Vanguard have their own direct-to-consumer advice offerings. These approaches are what’s termed ‘cyborg advice’; a mix of robo and human adviser.

    For now, the full-service financial planning model adds more value than these other approaches. Nothing to worry about, right?

    I’m not so sure.

    Clayton Christensen described the situation we might be facing in his book The innovator’s dilemma: When new technologies cause great firms to fail, first published in 1997.

    Christensen demonstrates how successful, outstanding companies can do everything ‘right’, and yet still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market.

    Toyota vs The Big Three

    One example of an unexpected success was Toyota entering the US car market in 1957.

    General Motors, Ford and Chrysler were the big three carmakers. Was Toyota a threat?

    Not at all, in the minds of the established players. 

    Toyota made small fuel-efficient vehicles for the Japanese market. The big three made much larger vehicles for the US market, where fuel was cheap.

    Toyota came in and dominated the small car end of the market, with no resistance from the big three. In fact, it would have been silly for the big three to compete in that space.

    However once Toyota owned the small car space, they could work on competing in the mid-sized vehicle space, which they did. They eventually launched premium brands, like Lexus, and competed there, too. 

    In 2008 they became the number one carmaker in the US.

    Larissa MacFarquar wrote in The New Yorker: “Christensen discovered the new technologies that had brought the big, established companies to their knees weren’t better or more advanced, they were actually worse. 

    "The new products were low-end, dumb, shoddy and in almost every way inferior. The customers of the big, established companies had no interest in them; why should they? They already had something better.” 

    You can see Christensen’s premise at work. It was the ‘right’ decision not to compete with Toyota and their small cars. However, failing to do so gave Toyota their foothold in the market.

    Are we missing something?

    Are we facing our own innovator’s dilemma in financial planning?

    Arguably, it makes no sense for us to compete in the low-value spaces, against the robo-advisers, or to go after millennial clients when the baby boomers still control 85 per cent of the wealth. The at-retirement market is still too tasty.

    Yet one can see these other players gaining a foothold. How long before they start to move up the levels, and threaten our cottage industry made up of comparatively unproductive smaller firms?

    3. The great leadership divergence

    My third theme for 2020 is this.

    Generally speaking, we’re an industry of 50 or 60-somethings running businesses built on retirement planning to the baby boomers (weren’t we born at the right time? Lucky us).

    While that trend hasn’t run its course, it’s making us complacent.

    If you’re a business owner who wants to carry on leading your business well into the future (regardless of your age), then you’ve got to have an eye on what happens next; and it’s not more of the same. 

    As I alluded to earlier, if businesses want to:

    • survive
    • prosper
    • retain existing talent
    • attract new talent
    • create exciting opportunities for younger team members
    • mentor the next generation of leaders
    • sell
    • or create succession…

    …then they will have to embrace an openness to learning and new ideas. More of the same will not be fit for purpose in the next decade.

    If you’re just seeing out your time at the end of a long and lucrative career, maybe you can get away with not doing any of the above. 

    I say maybe not to generate some sense of foreboding, but simply because I don’t know how quickly things could change.

    (For more inspiration, check out Brett's top three leadership books of all time)

    Overall, I’ve got no more insight than you do. But what I do know is it's never been a more exciting time to be involved in the financial planning profession.

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