The pandemic shook up many businesses last year. While some financial advisors felt the coronavirus financial impact, for many, business was booming.
So, to what extent did the pandemic lead advisors to rethink their business strategy? And what financial advisor marketing strategies did they use?
For Kevin Lao, founder at Imagine Financial Security in Florida, the pandemic turned out to be the launching pad to finally start his own business.
"After 12 years working for big firms, I decided to launch my own RIA (Registered Investment Advisor) firm during the middle of the pandemic," he said. "It was a challenging year for everyone. Being 'sent home' to work and juggle home life with a new baby was a unique situation. It shed light on how challenging it is for companies to integrate new technologies in a streamlined and efficient way."
Lao said that as an independent firm, he can "utilize the best of the best technology out there to better serve our clients." Focusing on fewer clients, he's been able to efficiently use his time and energy on those who need help the most. With the technological advances, he's also very "nimble in how we deliver our offering." That "will maximize my time in doing great financial planning work. It will also allow me to have more time with my family."
Coronavirus Financial Impact Had A Lasting Emotional Strain
He said that not having to commute back and forth to the office or client meetings made him realize how precious his time is. He now holds most of his business and client meetings via Zoom Video (ZM), and also holds educational webinars. Other digital platforms he uses are DocuSign (DOCU), Dropbox (DBX) Enterprise and Notarize. He also uses Yodlee, a data aggregation platform that allows his clients to log all of their financial assets in one place. He's also launched his own blog and podcast — something he couldn't do at a bigger company due to compliance restraints.
For compliance, he says there are several options available to financial advisors. RIA Registrar provides outsourced compliance services, while the XY Planning Network holds a compliance call every Wednesday.
"With Covid bringing to light many of the inefficiencies of bigger firms, it simply accelerated my timeline in going independent and launching my firm," he said. "For that, I am grateful for the challenges Covid has brought and look forward to our country going to a new normal."
David Zuckerman founded his financial planning and advisory firm Zuckerman Capital Management in 2008. The firm primarily serves the Mandarin-speaking community and business owners in Los Angeles and globally.
The Pandemic Increased Client Contact
"The one thing that changed for us was because of the pandemic we ramped up contact and frequency of touching base with our clients," he said. "We focused on when we speak with clients. We're big believers in the value of comprehensive financial planning. We view market corrections as part of a larger comprehensive financial plan that you can refer back to during times of turmoil."
As a result, he said that the impact of having a financial plan brought about an increased realization by clients of its value. From a strategy point of view, Zuckerman took advantage of cap-loss harvesting. He also explores other asset classes, such as real estate and REITs, to provide more yield to his clients. Also, his use of technology changed quite a bit.
"We're certainly making more use of videoconferencing," he said. He also slightly adjusted the way that they use financial planning software and some of the parameters that are built in.
Cheryl Costa, founding principal at Woodside Wealth Management, said that especially many in-person meetings transitioned to Zoom. Her boutique fee-only financial planning and investment management firm in Boston only has about 110 clients. She said that even her 60- to 80-year olds "were on the cutting edge as far as using Zoom and DocuSign." She attributes that in part to the help of family members and friends.
Coronavirus Financial Impact Leads To Appreciation Of A Financial Plan
Her firm also clearly benefited from people's realization of the value of having a financial plan and advisor during the pandemic.
"We're a smallish firm, so we generally take on between three and seven new clients a year. Nearly all of that is referral only," she explained. "But in 2020, we were absolutely inundated with people. We had three to four years' worth of new clients and prospects in one year. And it's not just me."
She said that many other financial planners reported the same positive outreach.
"When the market returns 20% a year on its own, people feel they can manage their portfolios on their own," Costa pointed out. "Whenever there is a decline like we experienced last February and March, it gets people really thinking: can I do this on my own?"
That's why she tells people who are doing it on their own to be careful. "The exact moment when they feel that they might be in over their head is probably a situation like we just experienced."
With an overflow of demand, some financial advisors simply could not accept more clients. And, while her firm gained new clients and saw increased revenue, they also lost two clients to Covid.
"It was a bittersweet kind of year for sure," she said.