THE FUTURE OF PROFESSIONAL SERVICES BUSINESSES

I am the co-founder of a financial services company and most of my focus is on helping private individuals make better decisions about their money. This means that part of my job is equipping myself, my colleagues and my clients with the best tools possible to make decisions about the future.

business solution-664731514.jpg

Investing at its core is always about the future and whether you believe things will be better than they are now. Aside from the obvious political noise causing all of us to question the economic future of South Africa, we also need to consider the impact of technology. More specifically, how technology might impact business and more selfishly for me, the future of professional services companies like mine.

There are many examples of business leaders who ignored the impact of technology on their businesses for so long that they watched their businesses erode to nothing. The impact of music and video streaming on the entertainment industry is a notable example. It is also worth remembering that technology has made many types of jobs and industries obsolete over the years. In the year 1900, 38% of the labour force in the USA was involved in agriculture and 25% in factories. By 2015, only 2% of US workers were on farms and only 9% in factories. That means business leaders cannot ignore the impact of technology. They need to be very careful about the fearmongering that goes along with any attempt to understand these changes.

If I believed everything that is currently being predicted by “futurists” and consultants, I should close my company now because these “experts” are predicting that my current career will be “Ubered” by artificial intelligence. Fortunately, I have learnt through hard experience, that people might be able to predict a trend but they prove to be horribly wrong about the timing. My favourite example is when it was predicted the Internet would change the way business was done by the early 2000s. History shows that these predictions were incorrect by at least 10 years. The cost to investors who bought companies based on these predictions was enormous.

Now we are being told that cryptocurrencies and artificial intelligence will change the world as we know it. Once again, I think some of these predictions might be correct but I suspect the hype about the immediacy of these changes is overdone. Consider the rocketing price of Bitcoin as the best illustration of this hype. I can’t help wondering how many people will lose money to snake oil salesmen selling Bitcoin as an investment “that can only go up”.

“Your business/industry will be obsolete in a decade”

I always smile when I read these types of headlines from authoritative-sounding consultants who make their living by telling us why our businesses will fail and why we need to pay someone to reshape our companies. They tell us that we need to “future-proof” the business so that we can have a new “roadmap to success” built on a “culture of innovation”. Having seen what consultants have been doing to South African parastatals, I prefer to do my own research with my colleagues. Any money that might have been paid to consultants would be better utilised within my business on staff members who have a vested interest in our future. If we succeed over the next few decades, it will not be due to some overpaid, over-tanned person with a Hollywood smile and a fancy suit.

Consider management consulting firms in the 1980s that advised Western businesses to adopt new company management methods based on Japanese corporates because Japanese businesses were rising in prominence on the global stage. The cycle turned, the Japanese economy tanked and Japanese management techniques went out of fashion. I don’t think any management consultants repaid their fees to Western firms who failed after trying to remodel themselves in the Japanese way. Naturally, these management consulting firms found different ways to sell their services to the next generation of managers. Decades later, they continue to exist, despite very limited evidence of long-term value being added to their clients.

Tech-driven change can be good for us

I cannot wait for technology to have a greater impact on financial planning. As with all other professional services businesses, we spend a lot of time on issues that detract from our primary responsibility to help our clients make better financial decisions in challenging times. The fitness industry provides a great example of how tech can assist industry professionals, not replace them. Fitness trackers now enable people to monitor themselves during a workout and to upload their exercise records to the cloud where their professional coaches can monitor them and give them personalised training plans for the following week.

They jointly agree on long-term goals and the coach then breaks this into a series of weekly programmes that are designed around the athlete and the goal. Amateur athletes living in remote areas can now access the best coaches who might live on another continent. This makes high-quality coaching more affordable for athletes and enables good coaches to access more clients. The price per hour of coaching might have reduced but everybody wins except for the low-quality coach who is replaced by free basic programmes available on the Internet.

There is no doubt that those who work in the professional services industry (e.g. lawyers, financial planners, investment managers etc.) will need to ensure that they provide an elevated level of expertise combined with excellent interpersonal skills. It is the human touch that will always cause people to engage with other people. Technology will put incompetent people out of business but high-quality operators will probably earn more from a wider range of clients who live in many different cities. I don’t think meetings will disappear as a form of client engagement, they might take place via mobile devices and they are certain to be more frequent, shorter and more efficient.

Less time will be spent on mundane information-gathering tasks that will be automated so that more attention can be given to decision-making. Clients will have more control over the monitoring of their current situation and their rate of progress towards goals that have been agreed upon with their advisors. More importantly, advisors will be updated in real-time when events impact their clients so that they can proactively engage with them immediately to ensure that correct decisions are made at the right time. Clients won’t care that the monitoring of their finances by their advisors is done automatically. They will derive enormous value from timeous and proactive input from their advisors that is tailored to their needs.

There is a reason why the best professionals in sports like golf and tennis pay lots of money to get the best coaches, fitness trainers and dieticians. It is likely that the professionals already have the technical skills and knowledge to win, however, they still derive value from an objective opinion from an experienced expert who can motivate them to be at their best. Professional services industries like financial planning are no different—our clients will still need someone to help them make smart decisions, avoid bad financial habits and motivate them to achieve their long-term goals.

Warren_Ingram.png
comments powered by Disqus

RW1
R1
R1
R1

This edition

Issue 388
Current


Archive


Leadership_Mag “Ripple effect" behind larger product recalls https://t.co/sx0nomrnXS https://t.co/6KuY2XHwXM 15 hours - reply - retweet - favorite

Leadership_Mag Don’t avoid risk, manage it better – SRK https://t.co/D8ayMo9ih6 https://t.co/ms6jSUwFuD 18 hours - reply - retweet - favorite

Leadership_Mag Just a note from our Leadership editor, Gregory Simpson. https://t.co/e6S6BMmx96 https://t.co/dTgro9ZDs7 4 days - reply - retweet - favorite

  • Bobby C Giammona-Wagner
  • Eketech Resources
  • Ashikwe Chinedu
  • Deon Cloete