Ron Bullis, CEO of Lifeworks Advisors, has a simple question for advisors who want to remain relevant in the coming years: “What is it that I do that is truly valuable and cannot be replicated by technology?”
Bullis said that when consumers can use tools like generative AI to get the same technical answer they would otherwise get from a paid advisor, but for free and at lightning speed, the days of being able to charge a 1% AUM fee are gone. are numbered.
“Get together, guys, it's coming,” he said. “We live in 'Happy Land' now. Margins are at an all-time high. Interest rates are at all-time lows. Custodians are doing a great job marketing and driving growth to RIAs through referral programs. The market has been kind to us. But it won't be like this forever. What happens to every other industry that exists in Happy Land? Abort.”
This candid analysis was part of the session “The Generative AI Tipping Point: Imagining the Wealth and Asset Management in 2034” at Wealth Management EDGE at The Diplomat Beach Resort in Hollywood Beach, Fla. Bullis was joined by Cory McCruden, managing director of wealth and asset management at Ernst & Young, and R. Scott Victoria, Chief Operating Officer at TradePMR.
Following the session topic, Bullis used trends to extrapolate what the industry will look like in a decade.
“Demographics take many generations to change and reality wins in the end,” he said.
By 2034, he predicted, about half of adults will be dead, the average age of an advisor will be 70, and tens of trillions of dollars will have shifted to millennials.
Victoria added that the rise of generative AI, which is still relatively fresh in the public consciousness, is also contributing.
“AI is very transformative,” he said. “Ten years go by in the blink of an eye.”
Bullis said the machines won't replace advisors, but customer expectations are already changing.
“The next generation of wealth creators will expect things to be instant, up-to-date and connected,” he said. “If the rate of change outside your firm is greater than the rate of change in your firm, there is only one outcome: You are left behind.”
Bullis said he had to rethink the training he received early in his career. In the past, advisors provided market access. Then, the value proposition became more closely related to planning.
“Ask yourself, 'What is the most valuable thing I do for my client?' If your answer is 'manage portfolios,' you will become Blockbuster,” he said.
Victoria said services like Netflix and Amazon have already trained consumers to expect these platforms to know them better than they know themselves. To compete with AI, advisors must focus on behavioral science and emotional intelligence.
“The next generation must be prepared for when AI fails,” he said.
Victoria said there is an opportunity, however, for advisors willing to embrace AI.
“Using AI to help prospect and market will be great for those who can recognize their weaknesses,” he said. “You'll have that help in generative AI, but it's how you communicate, not what you communicate, that's important.”