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What RIAs can learn from a futurist
Jon Patullo, 05/17/2015
Managing Director, Institutional Technology Solutions, TD Ameritrade Institutional
In 2020, a mere five years from now, futurist Peter Diamandis predicts that five billion of the world’s 7.5 billion people will be connected—66% of the global population online and suddenly accessible to everyone and everything.
Even with conventional estimates being more conservative at 3.8 billion connected, it is still at minimum an additional 1.6 billion new minds in the global marketplace in the next five years. That’s between 1.6 and three billion new consumers, inventors and creators equaling tens of trillions of dollars newly flowing into the economy.
As the available pool of assets is poised to break the floodgates, offering incredible new opportunities for advisors, the competition and range of solutions is also set to grow in volume and complexity. We stand at the edge of a tipping point as global connectivity is poised to truly change the world we live in. And when no one is too big to fail or too small to make an impact, your approach to investing and running your business will have to be at least as disruptive as the investment landscape you are operating in. So where does the RIA go from here? How can you be prepared?
As a leading futurist, Peter Diamandis, Chairman and CEO of the X Prize Foundation and Founder of Singularity University, is a powerful voice in predicting the disruptive future that lies ahead. At National LINC, Diamandis presented three critical insights that power his vision of what it will take to thrive in this coming future. Let’s examine each one and what they may mean for RIAs.
First insight: The only constant is change and the rate of change is increasing.
In the 1920’s, the average lifespan of a company on the S&P 500 was 67 years, and today it is 15.¹ The difference is in the technology at our fingertips. Today’s advances are in exponential technologies offering exponential growth. The very nature of a connected globe demands that successful ideas be disruptive and exponential, otherwise they cannot survive.
This means that RIAs will have to arm themselves with new skills, new research capabilities and new technology to provide the right advice to help their clients navigate new investment realities. Game changing ideas can and will come from everywhere and will be in a state of constant evolution. It will change how you assess risk and advise clients. What has always worked may no longer and you will need to ask different questions – Is there a safe haven for investors? What’s the shelf life of a blue-chip stock? Are there any industries that are insulated from disruptive forces? How can you leverage the disruption?
New technologies will continue to create massive shifts in wealth and new disruptive technologies will spawn new explosive companies. Companies that don’t adapt fast or can’t adapt to new realities will struggle to compete. By evolving your thinking now and asking these critically important questions you can begin to prepare your business and the way you advise clients for the disruptive future ahead.
Second insight: You either disrupt your own company/products, or someone else will.
Technology democratizes the world. Game changers can come from literally any corner of the globe, so the competition only stands to get fiercer. This competition will continue to drive advancements forward at an ever more impressive rate.
Diamandis believes that we haven’t even come close to the pinnacle of what’s possible. He believes that reality 10 years from now will seem like magic in today’s minds.
The takeaway? Innovate or be left behind. It is your duty to both your clients and your own livelihoods that you keep up to the cutting edge. Holding onto analog processes or looking only to established authority for direction could keep you standing still. Adapt the latest technologies, follow innovators, understand the landscape and assess and take risks. It’s not going to be enough to be a successful portfolio manager or a financial advisor. You will need to be where the world is headed or the market may demand that your clients look for relevant advice elsewhere.
Third insight: If you’re dependent on innovation solely from inside your company, you will lose. In a hyper-connected world (billions of people connected), collaboration will be the broad formula for success.
Tomorrow’s wealth will be created by investing in disruptive ideas. Managing that wealth will require a similar embrace of the innovative connected world at your disposal. At TD Ameritrade Institutional we put this insight into practice at our annual Technology Summit. For the past five years, we have been bringing together the top minds in advisor technology from leading third-party application providers to collaborate on how we can move the industry forward and deliver innovative solutions to our mutual clients.
If you don’t already have a network of professionals to collaborate with, we suggest you develop one. It can help you ensure that your business uses the latest technologies to keep up with advancements as they arrive. You’ll also need to expand where you look for clients, who those clients are and how you meet the challenges of managing their money, both in the technology you use and the way you assess risk. It used to be that your best clients came from the people you know. Now, technology lets you expand your network exponentially by connecting to the people your people know, the people they know and on and on. LinkedIn broke new ground in connecting professionals and continues to empower its users in ways we never used to think possible. This approach will need to be the new, ever-evolving normal.
The future holds endless possibilities, and while this can be overwhelming and seem too distant to matter today, orienting yourself and your business to a long-term vision is the key towards success in that future. Begin to follow innovators like Diamandis and embrace the promise of a globally connected tomorrow. You’ll be a better advisor and business owner, and you’ll help usher the RIA model into the world of “magic” that lies ahead.
1 Richard Foster, Yale University
Content provided is for educational purposes only and is not intended to be advice for any firm.
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