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As more and more consumers tap into services like digital banking and online investing, it’s clear the decentralized finance movement is here to stay. With the shift away from traditional, centralized services toward peer-to-peer transactions, financial advisors may be concerned about remaining relevant in a changing landscape.
Fortunately, your clients still need your expertise, as many will be looking for guidance in navigating the “new normal.” To help, 10 members of Forbes Finance Council share how financial advisors can adapt to continue to serve their clients in a DeFi-dominated market.
1. Built trust with clients to become their problem-solver.
Advisors must build trust with clients and be accessible to them, no matter the form of delivery—especially clients who are Indigenous or people of color, as they often face inequitable barriers to banking services. Digital banking can be convenient for the self-directed, but when people have an issue, they want someone to own the problem and solve it. We need to build digital capabilities with that human-touch dependency in mind. – Randell Leach, Beneficial State Bank
2. Consider how you can educate your clients about DeFi options.
DeFi provides the technology for people to manage their finances, but there is still a gulf between the complexity of financial products and the sophistication of investors. While consumers will be able to do everything themselves in DeFi, financial advisors still have a role to play in educating and mentoring consumers as they consider their options. – Morgan Deane, Baader Helvea Group
3. Focus on your advisory role in financial planning.
The financial plan is still the bedrock of the advisor-client relationship. Technology had made it easy and fast to conduct transactions. But transactions were never really at the center of the relationship. No app can talk a client out of making a really bad decision that is irreversible because the app doesn’t know the person. Only a human can do that. – Todd Sixt, Strait & Sound Wealth Management LLC
4. Join a group that studies crypto and blockchain.
No matter the investment vehicle(s) or currencies, wealth management and advisement remain important. What financial advisors do is save their clients time, which is the most valuable of all assets. One way advisors can stay relevant is to join a crypto or blockchain meet-up group. There are currently groups that meet in person, but many are meeting online, too, which gives flexibility. – Kurt Kunselman, AccountingSuite™
5. Help clients stay focused on their long-term goals.
Successful investing is an age-old conflict between the investor’s desire for the sugar high of current consumption versus patient saving and accumulation of capital for future uses such as college or retirement. Serious financial advisors share this wisdom with their clients. No adaptation is necessary. – Erik Christman, Oxford Financial Partners
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
6. Embrace technological shifts so you’re ready to help clients.
Embrace the paradigm shift DeFi technologies provide. While digital banking and online investing tools are now commonplace, fundamental advancements are afoot in the form of central bank digital currencies. These CBDCs will allow for “programmable money,” which advisors must explain to their clients. – Christian Kameir, Sustany Capital
7. Connect with DeFi services to give yourself a competitive edge.
Connect with these services to get clients and modify fee structures to compete and for different uses. Digital financial services are exploding and are still at the beginning of a large wave, so it is pivotal to partner with these services to attract clients. Financial advisors will also need to be a bit more cost-competitive while offering outsized value so they are selected over cheaper alternatives. – Carlo Cisco, SELECT
8. Take a broader approach that includes tax planning and comprehensive asset management.
Financial advisors must become more than product salespeople or asset managers. They must become more comprehensive in their approach, encompassing tax planning, retirement planning, risk management, investment planning, business value growth planning, real estate management and so on. Knowing your specific offering and the exact individual who needs that service offering will help advisors continue to remain relevant. – Justin Goodbread, Heritage Investors
9. Become an expert in DeFi lending.
Consult on certain blockchain currencies (such as Ethereum) to provide and secure funds with a crypto reward. Expanding on traditional lending, DeFi provides opportunities to access funds through innovations such as no-collateral loans at higher interest rates or peer-to-peer lending. Financial advisors can also help apps integrate with each other, creating a financial ecosystem and promoting innovation. – Dmitry Dolgorukov, HES FinTech
10. Pursue relevant professional certifications.
There are now professional credentials, such as the Certified Crypto Wealth Manager certificate, that financial advisors can pursue to get up to speed on the fundamentals of tokenomics, DeFi and blockchain tech. Financial advisors should not dismiss the power of blockchain, which is not a fad but is here to stay. Take it seriously and stay informed. – Tyler Gallagher, Regal Assets
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