“The only person that is undefeated is father time” – Charles Barkley
I recently saw a great blurb on social media about industry change. The largest taxi company has no cars in its asset base (Uber). The most popular media outlet creates no original content (Facebook). The largest movie venue has no theaters (Netflix). The largest accommodation provider has no real estate (Airbnb). The most valuable retailer has no inventory (Alibaba—goodbye suburban malls). And, of course, Kodak, once a giant, emerged from bankruptcy a few years ago, a shadow of its former self. Father Time indeed is undefeated. While Charles Barkley was referring to athletes, his words resonate deeply with the relentless march of progress in business. Change is universal across industries, and financial services are no exception.
The financial services industry has transformed immensely over the last 15 years. We’ve moved from transaction-based business models to fee-based asset management. There’s been a shift toward holistic financial planning that adds value beyond just investment management.
Advisors now have instant access to tools for screening investments and analyzing data. Clients, too, can look up their portfolio details with just a few clicks. It's incredible to think Morningstar only went public in 2005—just two years before the first iPhone.
While broker-dealers and advisors have adapted well to these changes, the next wave of disruption is already underway. Four major forces—technology advancements, new competition, legislative shifts, and evolving consumer preferences—will reshape the industry in ways we’re only beginning to understand.
Tech:
Technology has made research and portfolio management tools accessible to everyone. Advisors now perform due diligence in minutes, and clients are better equipped to manage their own assets if they choose to. But while technology has made advisors’ jobs easier, it hasn’t yet translated into lower costs for clients.
Investment management fees remain stubbornly high at 1-1.2% of assets under management. Clients are beginning to demand more for their money—better financial planning services, greater fee transparency, and tailored options to suit their needs. The technology exists to deliver this. The challenge is whether the industry will adapt quickly enough.
Competition:
The rise of robo-advisors has captured headlines, offering automated portfolio construction at a fraction of the cost. Even industry heavyweights like Charles Schwab are investing in this space. While these platforms are unlikely to replace human advisors entirely, they’ve pushed the industry to evolve.
Money management is deeply emotional, and most clients value the guidance of a trusted advisor—especially when navigating complex financial planning. Still, independent firms with transparent, flexible fee models are gaining ground, challenging traditional brokerage houses to innovate or risk losing relevance.
Legislation:
The potential introduction of a fiduciary standard by the Department of Labor could further disrupt the industry. The concept—requiring advisors to act in their clients’ best interests—seems obvious but has sparked fierce resistance from brokerage houses. While opponents argue it may limit access for smaller accounts, the reality is that many of these clients already receive subpar advice at inflated costs.
If implemented, a fiduciary standard could eliminate predatory, commission-based models, paving the way for a more transparent, client-focused industry. Similar reforms in the UK have already shown promise. Whether this change arrives in the U.S. soon or takes another decade, the writing is on the wall.
Consumer Knowledge:
The ultimate driver of change is the investor. For years, clients have accepted the status quo—paying high fees for basic investment management. But as competition heats up and education improves, clients are beginning to ask tough questions:
Should I pay 1% or more for investment management alone?
What are my actual financial planning needs?
Am I getting value for the price I’m paying?
An informed public will demand more, pressuring the industry to deliver better services at fairer prices. The days of complacency are over.
Uber changed transportation. Netflix reinvented entertainment. Airbnb redefined hospitality. And now, financial services are undergoing a similar transformation. The firms leading this charge will still provide investment management and financial planning but with a sharper focus on transparency, value, and the client’s best interest.
The times are changing, and as Mr. Charles Barkley says, father time never loses, and neither does progress. The industry is changing, and for investors willing to seek out innovative providers, the future looks brighter than ever.
Disclaimer: This content is for informational purposes only and is not intended as personalized financial, tax, or investment advice. While we strive to provide accurate and up-to-date information, all investments carry risk, and past performance is not indicative of future results. Any strategies or insights discussed may not be suitable for your specific situation. If you’d like to discuss how this applies to your financial plan, feel free to reach out.