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EIGHT PREDICTIONS FOR THE NEXT DECADE

Ten years from now, here's what financial professionals will see:

More Communication, More Places – This one's obvious: More communication will occur online between financial advisors and clients. Part of this will stem from the boomer generation's increased usage of social media and the even-greater adoption of the next generations.

But social media is also changing how we communicate. In the past, conversations happened with the client sitting across at your desk, on the Web, or through e-mail. Increasingly those conversations will happen on third-party sites – sites that are outside your control. The change will lead firms and advisors to adapt to new devices: mobile and tablets and perhaps even Google Glass and technologies we can't yet conceive.

This will also spark new ways of managing compliance, as Melissa Callison, Charles Schwab's vice president of compliance communications, points out. “This will necessitate a change in how we supervise our brokers, because today it's a lot of e-mail or over-the-shoulder supervision because they're in our office. In 10 years, we'll need ways to supervise them when they're not close to home, and that'll take new ways to manage compliance and infrastructure investment.”

The Chief Digital Officer Replaces the CMO – Related information will be formatted first for online purposes. That means – as we are just now starting to see – a shift to more visuals such as graphics and far fewer words. Content will be made digital first – from brochures to annual reports. This, in turn, is already leading companies to hire leaders with digital experience, oftentimes replacing the traditional chief marketing officer.

Social Media Trumps Mainstream Media – You've worried about how traditional public relations might harm you or your firm's reputation. What about social media? If you look out 10 years, social media might even take over traditional PR as the primary reputation channel you'll need to address. If that's not reason enough to get social, we're not sure what is.

Crowd-Sourced Advisors, Products – Transparency in the online world empowers a broader range of public opinion, not just media pundits. The thumbs-up/thumbs-down reviews you've seen at your favorite hotel or restaurant review site may eventually apply to advisors, money management firms, portfolio managers, and investment products. In essence, you'll get crowdsourced opinions on financial advisors and products – not a bad thing at all. Crowds are generally honest, although you must be careful not to put too much credence into any single source.

Peer Reviews of Advisors – Imagine you're a retail investor looking for good financial advice. In the past, you might have chatted with a friend over coffee. Or you might have forgone the discussion entirely, not feeling comfortable about raising the subject of money. To find a professional advisor, you'd probably do a search online or even in the Yellow Pages. And you'd be hard pressed to know anything about the advisor aside from what they say about themselves.

Today's advisors increasingly understand that investors are able to easily and privately view a pro's biographical and professional info online, everything from licenses to certifications. And increasingly, they'll be able to find an advisor through their social networks. Their advisor might connect with them through Facebook to invite the investor to view his or her video on retiring successfully. Investors might engage in a private online chat. They'll also be able to seek online opinions about advisors from other investors who have worked with them. See Figure 5.4.

Trading through Social Networks – We're already seeing social networking sites built for investing – sites that allow investors to form

The Evolution of News Distribution

FIGURE 5.3 The Evolution of News Distribution

groups around common themes and invest in baskets of stocks they create or to follow and invest in others' portfolios. But might we even see people placing trades through Facebook? I recall the app we developed several years ago that showed consumers on Facebook how they could instantly have a basket of mock stocks based on their interests. You couldn't make a trade through Facebook, but you certainly could get introduced to the idea in a personalized and compelling way. And that will likely pose new challenges for regulators: How do you supervise that?

Yelp Reviews of Advisors

FIGURE 5.4 Yelp Reviews of Advisors

More Access to Financial Education and Viewpoints – Puzzled over how a particular security works? When you have financial questions, you can peruse online libraries to track down information and research on the topic. You'll be able to get opinions on the research from others exploring the same topics. And you'll be able to get regular feeds to such content and engage with its creators in ways that, in recent years, were available only to the rich or connected.

Less Insider Trading – Recent SEC interpretations involving Regulation FD have allowed publicly traded firms to disclose financial information on social media within certain guidelines. This transparency of information will deter corporate insiders from trading illegally on what they know. Insider fear of being exposed will serve to self-police the online world, a trend that Unience, an investor social media platform in Europe, has already seen. And regulators will have developed better online tracking systems to collect and report data on emerging issues. Ideally, technology will help them more quickly detect fraud and prevent investors from losing their nest eggs.

The financial industry knows it needs to improve its reputation following the damage wrought by the 2008 financial crisis and the multi-billion dollar fraud of Bernie Madoff. Technology is a tool that can transfer power to the hands of individual investors who are looking for more transparent ways of working with wealth managers.

Technology first, then transparency. We've seen this movie before. Now we'll all watch as it comes to a financial theater near you.

 
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