Resisting change guarantees mediocrity.
Investment firm clients are expecting more for their money
Human evolution is a powerful force especially when it comes to how it has influenced the development of our subconscious minds.
Most of us let fear control our decision- making process with the goal of protecting the three main drivers of our ego: control, security and esteem. Unless these are threatened, we avoid change at all costs and are willing to allow anxiety about the great unknown to paralyze us into accepting the mediocrity of our current situation.
However, as much as we fight it, change is within our DNA. According to Dr. Jonas Frisen, a stem- cell biologist at the Karolinska Institute in Stockholm, about 300 million cells die every minute within our bodies. In less than a decade all of your cells will have died and have been replaced thereby providing you with an entirely new body.
Life isn’t meant to be a constant, but instead it is in state of flux. Human nature can be rather stubborn and so it often takes a negative catalyst that causes some form of suffering to force us to change in ways that often make us stronger. This mechanism is an inherent part of human nature and helps ensure our survival, as the consequences for those who stubbornly refuse to adapt can prove dire.
Legendary former IBM chief executive Thomas J. Watson summarized it perfectly when he said: “Would you like me to give you a formula for success? It’s quite simple, really: Double your rate of failure. You are thinking of failure as the enemy of success. But it isn’t at all. You can be discouraged by failure or you can learn from it, so go ahead and make mistakes. Make all you can. Because remember that’s where you will find success.”
At a commencement address, Jim Carrey once talked about his father who wanted to be a comedian but didn’t believe it was possible, so he went with the comfortable choice of becoming an accountant. He was eventually let go from that so- called “safe job” causing tremendous stress for his family doing whatever they could to survive. “I learned many great lessons from my father,” Carrey went on to say. “Not the least of which was that: You can fail at what you don’t want. So you might as well take a chance on doing what you love.”
There are some powerful lessons in these words not just for each of us, but for companies as well. You can see just how powerfully entrenched the mediocracy is in our economy, as many of our companies choose the comfort of the status quo over the risks that come with trying to innovate. Perhaps I would go as far as to say that for the most part, we’ve become a culture of entitlement and complacency.
A great example of this is within our wealth management industry, which is dominated by the banks that control the market. It took a decade of resistance before they caught on to the explosive growth of ETFS and it took ages for the planning-focused U. S. Registered Investment Advisor (RIA) model to make its way north of the border.
Surprisingly, even the smaller independent firms who are supposed to be the innovators are stubbornly sticking to old approaches and products until their margins decline so significantly that they are forced to adapt to a direct- to- client holistic planning model
Among those that have already transformed their practice to this model, unfortunately, many are lacking the resources to scale it out in any meaningful way or are simply content to harvest existing cash flow.
That said, clients are rightly expecting more for their money, including access to the latest technology, advanced wealth planning, global markets and diversified investment opportunities.
This means in order to survive in today’s rapidly changing and high- dynamic environment, independent firms will need to be large enough to be able to offer all of these services in- house. The larger banks are already well down that path but they too need to change by recognizing that the true value of their offering is their front- line advisers and not with the products and services they are offering.
For those corporate leaders wondering where to begin, start by letting go of that complacency and replace it with the passion of why you got in the business to begin with. Not only will you be happier, but so will your clients.
Martin Pelletier, CFA, is a portfolio manager at Wellington- Altus Private Counsel Inc. ( formerly Trivest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk- managed portfolios, investment audit/oversight and advanced tax and estate planning.