A giant RIA custodian sees five forces of change bearing down on advisors.

Sanjiv Mirchandani Fidelity Investments President, Fidelity Clearing and Custody

Speaking this morning at the Fontainebleau hotel in Miami Beach at the eighth annual MarketCounsel Summit, Fidelity Clearing and Custody president Sanjiv Mirchandani present his vision of the future of investment advice. Force one, he says, is the big demographic shift coming, as boomers retire and millennials rise.

"If you can do a good job with these demographic changes, you should feel very good about the future of your practices," Mirchandani says.

At the same time, Mirchandani sees a "looming advisor transformation" as the number of advisors in the business has declined for years. He predicts an "advisor gap" of 10,000 by 2020. And he sees a productivity gap, too, in what he describes as "a cottage industry, a group of artisans."

Roboadvisors are just one piece of force three, the "rise of the digital-human interface."

"All of your customers are going to demand a digital interface," Mirchandani says, and you'll have to combine that with human interaction, too.

For force four, Mirchandani sees an up-ending of the importance of advisors' traditional value propositions, with old-school services like alpha generation and manager selection taking the back seat to financial planning and behavioral finance.

And finally, Mirchandani echoes others' warnings of more consolidation coming. RIAs and other advisors, Mirchandani says, "face three stark choices": be consolidators, sell their practices, or focus and differentiate what they do. 

Edited by: Neil Anderson, Managing Editor


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