Ep02 - Rethink: Financial Advice vs. Sales

Adam Holt and Derek Notman open with a question they say every advisor should be able to answer plainly: are you an advisor who sells, or a salesperson who advises? Both came into the business at insurance-affiliated firms, and both describe how their own answer shifted over time. The discussion then turns to scale, and the numbers explain why the distinction has become muddy. The hosts cite more than 30,000 registered investment advisers in the United States, the large majority of them solo or small ensemble shops, alongside more than 600,000 people registered with FINRA and roughly 409,000 licensed life insurance agents as of a 2020 count. Much of the episode is about compensation transparency, and specifically a test the hosts propose: would a client pay the same amount in cash if the compensation were unbundled and stated up front rather than disclosed deep inside a document?

• The difference between professional identity and job title, and why regulators keep pushing on it
• Industry scale figures the hosts use to explain why the word advisor has become ambiguous
• The unbundling test: would a client pay the same amount if it were quoted in cash up front?
• Why answering a direct question directly is itself a trust signal

Full timestamped transcript.

[00:00:00] H. Adam Holt: Welcome to Rethink: The Financial Advisor Podcast. My name is Adam Holt.

[00:00:06] Derek Notman: And this is Derek Notman. We are your hosts, both veteran advisors and fintech CEOs who challenge the status quo, question everything, and have fun doing it. Hear honest commentary on the challenges facing advisors today. And be part of a community where we can all rethink the profession.

Now on to our episode.

[00:00:29] H. Adam Holt: So Derek, I'm wondering, are you an advisor who sells or a salesperson who advises?

[00:00:35] Derek Notman: Yeah, I, that, that's a super interesting question. I would say when I started a little over 15 years ago, I was a salesperson who advises, but there's been a shift, and now I would say it's flip-flopped.

But that's tough 'cause it's almost hard to quantify one or the other, but I would say there's definitely been a shift towards the former at this point. I'm curious, I, I think that you've got a similar journey there, but I'd be curious to know how you started and how you would identify yourself now.

[00:01:05] H. Adam Holt: It's a wonderful question because it gets you stuck in this cycle, and I know many of our listeners are probably asking or have asked that question before because professional identity is so important today, not only to ourselves and how we construct our firms, but also to our customers.

There's a huge regulatory movement towards this, as you already know. We've all been affected at some level by either the DOL or best interest.

[00:01:33] Derek Notman: Mm-hmm.

[00:01:34] H. Adam Holt: Really this advocacy for the customer. I think it's important that we define this. What... When you started out in the business, how did you come into the business?

You mentioned this.

[00:01:43] Derek Notman: Yeah. I came in, I'd done a couple interviews with different companies, and I came actually in as a life insurance agent. I found that out after I got hired. Right? I, I really wanted to help people with their money. Went through the interview process, everything sounded good, and they're like, "Well, you gotta sell this life insurance thing as part of this."

I'm like, "Okay. Well, that's cool. I get it. There's risk management involved here." But then I got into the trenches, I'm like, "Uh, all I'm really selling is life insurance here and maybe some other stuff on the side." So really, I, at that point, like I always... And I've said this before in even other podcasts, I've always had the CFP mindset.

Even though I wasn't a CFP for many years, I had that mindset. So I, I would say the salesperson who advises is actually quite fitting when I came in. Mm-hmm. But eventually I, I flipped it and I got the CFP and I did all the other things that we do to actually become an advisor, but we still have to sell at the end of the day.

We're gonna get to that, but that's actually a big part of being an advisor, I would argue. I, I agree. I'm curious how, how... Yeah, I k- I don't know. I mean, what are your thoughts on that? Did you have a similar start?

[00:02:48] H. Adam Holt: Well, all my journeys are... It seems like a saga, right? It's less than a story or a snippet. It- I also, like you, got into the business at a financial services firm aptly marketed that way- Yep

and found out that it was a life insurance company that had gotten into the investment business. And I was there, I loved the people. The people really drove me to, to do it. I learned the life insurance business. I didn't... At the time I really didn't understand it. And when you get into a business that requires the distribution of a, a solution, you find that the advice usually winds up recommending the solution.

Big surprise. Mm-hmm. Because at the end of the day you need to pay the bills and your managers and your mentors are all expecting that you're gonna deliver sales results. So I was very clearly a salesperson in my early days. I learned the product, I learned the process. That was good. But I also, like you, within the first couple years realized I wanted to be a financial planner.

I- mostly because of my own ego. I wanted to be viewed by my customers as someone who was an advocate for them first, and these solutions were literally just the execution of our advice. And of course, I, I did have some success with that. When I went into financial planning really early I also, like you, got my CFP- Very early because I was just committed to education.

I figured as a young person, the only way I was gonna compete was just to be the smartest person in the room for my age. That was what I did.

[00:04:10] Derek Notman: Totally, right? Yeah.

[00:04:11] H. Adam Holt: What else? I mean, I didn't have a natural market, I didn't have my call list of 100 people- Mm-hmm ... to call upon. But you know, it's interesting, so many of the advisors that we both know started in either the wire house or in the insurance or annuity space because that, those are the ones that hire us into the world, right?

Very few advisor-only firms existed 15, 20 years ago, and were willing to pay somebody a base salary who had no clients to bring to the firm. Right? We- the- the infrastructure is set up specifically to bring you in as a product person first, still to this day.

[00:04:44] Derek Notman: It still is. Product distribution is how the whole industry's been built for and, and structured for decades.

Over 100 years, arguably.

[00:04:51] H. Adam Holt: Right. It's not broken, don't fix it, right? But you know, of course, what we have to do with it.

[00:04:55] Derek Notman: We gotta rethink it.

[00:04:56] H. Adam Holt: We gotta rethink it. So that doesn't mean we're gonna change it. I think what's happening is when we thought about what we wanted to talk about today, one of the interesting themes that brought Derek and I together, having different paths that brought us, that we mentioned in our first episode, is that we both have a similar mindset that the financial advice community actually does act in their client's best interest.

Most of the people that I know in this business really want to help. We lead with that. We lead with advice, we lead with empathy, with authenticity. Now the products, although really critical, and we, we can't discount this, they're... When you give somebody advice and you don't give them the opportunity to take action, you're not necessarily serving them.

That would be like me saying, "Listen, Derek, uh, you should probably eat better. Anyway, what are you watching on Netflix today?" Right? Yeah. If I'm not actually gonna help you go, "Okay, let's not go to, to this fast food. Let's go to a get a salad or something," uh, then I can actually be an advocate for you.

[00:05:56] Derek Notman: No question.

I think that's ex- there's nothing wrong with the majority of financial products out there, but I think this whole leading with advice shift is happening, and it's super interesting how there's this transi- transition from sales to advice. We're not saying that means products go away, it's just the products are sold differently.

It, it's interesting when you look at, at perception, and I think the perception forever is that unless you were a CFP, unless you, you had all those credentials, is that you were just, uh, a salesperson. Mm. That was the consumer's perception. And not that was bad, but that's just what it was. But I think the perception moving forward, and even arguably today, and I think this has been driven in part by, like, the DOL and best interest, and I think just access to information has also helped drive this, is that the consumer is now perceiving salespeople as maybe not the best thing for them.

Mm. Right? Although that at the end of the day, if they're gonna get a product one way or another, it's kind of interesting 'cause the s- the end result is almost the same, but it's that journey, it's that process, it's the perception that's changing. And if, if the regulatory bodies are doing it and the consumer's doing it, I mean, as advisors, we really...

And even salespeople, we have to pay attention to this.

[00:07:10] H. Adam Holt: Yeah, it's an interesting thing because I think a lot of the commentary was what hits the media, what hits social, and what we tend to talk about it in kind of a off air is does productivity of placing the business actually predict you being a good advisor?

I mean, w- we talked about this before, which was- Most of the market has always for years said that the top advisor, the best advisor, was the top sales producer.

[00:07:40] Derek Notman: Right. It, it goes back to sales- What? Exactly.

[00:07:43] H. Adam Holt: How did that... Why is that? I mean, they made the most money for the company, not necessarily they were the best advisor.

'Cause people, I don't know if you noticed this, uh, there's been a bunch of companies that have switched from the, they're an agent or a representative to now they're a financial advisor. Everybody's a financial advisor, right? Yeah. No, I- CFP or not. CFP, they don't even know what the ethics committee does, but, you know, there's a...

I don't know. It's getting washed out for me. I'm not exactly sure who's an advisor anymore or not. You found some fantastic stats about the number of people in the business. I thought that was- Yeah, it's- ... really interesting.

[00:08:13] Derek Notman: It's fascinating. You've got, and I don't know the exact number here, but it's over 30,000 RIAs in the United States.

What's interesting is, like, 29,000 of them are small or solo shops, which is fascinating. Hm. Like, solo or, or small ensemble shops. We've got over 600,000 people registered with FINRA, and there was a study that came out in 2020 that 409,000 life insurance agents in the United States. It's fascinating. Wow.

But they're all, even the RIAs, I mean, so this is what inter- is interesting is, like, the bulk of the numbers here are salespeople. That's how they've been classified forever, and you've got this smaller number of people who would identify with advisor first, leading with advice type of mentality. But there's been a massive shift there, and the growth in the RIA space is going crazy.

Where the growth in the salesperson environment, I... And I'd have to back this up with some stats, but it, it, it appears to be stagnant.

[00:09:09] H. Adam Holt: Hm.

[00:09:09] Derek Notman: Where there's almost no growth there. So you can tell that something's happening.

[00:09:14] H. Adam Holt: Well, there's no question there's enormous amount of turnover in the early years for all these businesses, as we all know that there's one in four chance of surviving if you have a good shop behind you.

It's amazing to see how many of the-- I-- We've done a lot of surveys on this, specifically with some of the wealth management companies at our company to try to figure out what's happening in the field force distribution, um, market. It's actually a program that we put. We'll put a link to it in this, at the bottom of it.

It's kind of interesting reading. But it's amazing to me how many of the larger companies today are switching over their own identity to financial advice, holistic planning, advice first, mandating CFP, starting to push this. There is a wholesale shift of the organ-- industry to move to an advice-led experience.

That doesn't mean that product sales are going away. That's been the lifeblood for many companies. It's why they can afford to pay what they pay, um, financial advisors. It's been obviously a pretty good profession for many people. That being said, I think we're gonna start to see what we've been hearing in the undercurrents of changing compensation.

I think we're gonna start seeing this because how somebody is paid directly impacts their identity, right? We tend to provide all the value and advice to our clients throughout the years, but then we get compensated by the assets and/or the products that they place. In some measure, there needs to be better disclosure as to how that's actually working And I'm not, I'm not sure it's-

[00:10:43] Derek Notman: Transparency

[00:10:44] H. Adam Holt: tran- that's it. It's transparency. How do you think this is gonna play out? I mean, if we rethink compensation in our business, if in fact I'm right, and how you've h- how a person is paid is how that defines their consumer-facing identity, right? You get paid by placing a mortgage. You get paid by receiving a money from, uh, a TAMP, right?

These are, this is what I'm talking about, right? You get an insurance commission.

[00:11:10] Derek Notman: Yep.

[00:11:11] H. Adam Holt: Does that overarching d- kind of dictate what your consumer's identity is, unless you're charging a fee or an hourly rate?

[00:11:18] Derek Notman: I think it does, but I think it's also shifting. And you, and you mentioned mortgages. This is fascinating.

So I have a friend who is, uh, actually pretty high up at one of the, uh, top three banks in the country, and manages a ton of mortgage brokers. They just switched their entire compensation structure from commission only to base, plus now just a percent of profits. Hmm. So they also are moving away from that, this product type of compensation structure.

So I think it's gonna happen more and more, and it does really identify or derive the identity of, of who you are based upon how you're paid. It's really fascinating. I think the financial services industry tends to be a bit slow to catch up with whatever else is going on, but I see it happening. I, I think it, for rethinking this, I think this is the direction it's going.

[00:12:07] H. Adam Holt: Well, I think if financial, if, if financial advice specifically is going to earn the rights to be a profession, I know this is gonna be controversial to some of you, right? The law- lawyering, being an attorney is a profession, right? Yep. A tax is a profession.

[00:12:23] Derek Notman: Yep.

[00:12:23] H. Adam Holt: A consulting is a profession. You pay for the rate.

You pay the rate for the person based upon their skill and their capability and their firms, right? And you pay more re- for more capability ideally, or skill, and you pay less for less, right? Um, if financial professionals are really moving towards the fee, one of the things that I, I kind of think of always everything in analogies, right?

Can you imagine go to a doctor and they actually get paid not based upon the advice they give you to their patient, they actually got paid by how many drugs they prescribed? I mean, Yeah. If you got paid on prescriptions, would that misalign the kind of health guidance you would get? Probably.

[00:12:59] Derek Notman: I think it can.

I think so. I think it can. Obviously the, they're held to a different standard though, right? 'Cause the CFP is just a designation. Versus like the s- the CPA or being an, an attorney, and those are actual, like, licenses and boards that, like, you have to, like... It's a totally different, expectation isn't the right word, but, like, it, it holds more validity than just saying, "Hey, I have my..."

Not that a CFP is a bad thing. I think it's extremely important, but that's almost a whole nother topic. Like, should the CFP become a license?

[00:13:29] H. Adam Holt: That's interesting. Right? Right. I mean, a lot of- but we all have these licenses, whether you're a registered investment advisor, uh, FINRA or otherwise, or insurance p- or provider.

You've got to get licensed in every state, but they're not necessarily making these mandates. Now, I'm not actually suggesting, Derek, that we completely overhaul the system. No. Where I think it matters is this, and here's where you can take this into your practice. The reason why we put this at such a, a primary spot in this podcast episode is because we think it's critical that everyone who's in our space address this question: What is my identity?

And what is that persona? What is that identity brand? How will it dictate how I market, how I build my firm, what I focus on, what kind of content I'm gonna create? What am I not gonna do? What am I gonna say yes to? What am I not gonna... Who am I gonna partner with if I'm not gonna focus on this area? And I think understanding whether you're gonna lead with advice and be an a- advisor who, who sells or implements or a salesperson who advises is gonna really im- im- impact that throughout the rest of the mentorship that we hope to provide, 'cause we're gonna touch on this.

It's gonna influence.

[00:14:38] Derek Notman: Yeah, it's- The identity question's a huge one, and I think it, it's a challenge for a lot of us, and you and I experienced this when we started, is we came in under the guise of financial advice, but really it was a product thing. So we were conflicted with what our identity was from day one.

We didn't really know what it was. So it's tough. So I think that's why this question is so absolutely important, 'cause you're right. Being authentic, being genuine is not only important for us, but our, our customers, the consumer's demanding this. They, they have access to information like never before, so they wanna know, like, who the heck is this person?

We have to pay attention to that. It's the whole, like, we don't wanna be sold to, we wanna buy, and there's plenty of buyers out there, but people don't wanna buy from somebody that's not authentic and genuine and doesn't have a clear identity. As an advisor or a salesperson, I mean, either/or, if you don't have a clear identity, then how is someone gonna be able to identify with you to know if you're the right person to help them with whatever they need?

[00:15:36] H. Adam Holt: That's true. I- it's funny, we- this came up in a prior conversation. We said as a joke, if you took the product compensation that is typically earned from placing and solving a whole bunch of problems for a household or a business, whoever you work with, and then you actually just wrote that down and said, "Okay, I want you to pay this in cash."

Or if, you know, you stripped out you stripped it out and said, would they pay you the same amount? And I think it's been convenient that it's been... It's one of those things it's hush, hush, don't talk about it. It's disclosed on page 53. And you read the prospectus, right? 'Cause I read it. Oh, yeah. And therefore I've disclosed it.

Maybe you've done that on your ADV or y- Yeah I don't know how all of this stuff actually gets communicated, 'cause unless you're coming up front and saying this... And it really reminds me of a question somebody asked me about authenticity. They said, "When somebody asks you a question that's a yes or no answer," and of course there's little details, there's always explanation.

You should answer the question first. Unfortunately, most people, when you ask them a straight, tough question, they give you a whole bunch of stuff and then they answer the question at the end. And you know what that sounds like? It sounds like excuses. I wo- I wonder how much- Hmm ... more we could get control over being authentic by saying upfront, "By the way, here's how I get paid, and here's how much it's gonna be, and it's gonna be this in dollars."

Not in percentages or bips or whatever. It's this how much dollars. But let me now tell you why it's worth it, what I'm gonna deliver. Because I think there's been a real disconnect, and it's unfortunately a disservice to the f- the consumer, that when you ask them, what does your financial advisor do and how much does it cost them, most of them have no clue.

They provide me comfort and confidence. That's what they provide. It's a person to call instead of a computer or someone- Yeah ... who just got out of college and is manning the phones that day. They're buying confidence, hopefully competence, but I don't know that they know what they're paying and really what they're getting.

[00:17:24] Derek Notman: I don't think so. I don't think many of them can actually articulate it. I'm actually helping a friend right now switch advisors. They're not- Mm ... for our, because of our relationship, I'm not working with them. I kept asking him, like, "Well, what are you paying?" They're like, "Well, I don't know. I think I pay this.

I'm not quite sure." And they couldn't really dri- you know, or like articulate the value either. So I think it's there. People want it, but you're right. Like, I think for so long, the, the f- the price has been buried, and this is a chicken egg type of thing, right? Did consumers get comfortable with paying for financial advice and products because of how they've been distributed forever, right?

Or was it the other way around? I don't know. It's tough to know. I don't know if we'll ever be able to answer that. However, it feels like there is a shift. Pretty much everything in our lives these days is subscription-based, right? Mm-hmm. I know what I pay per month. I'm willing to pay that. It's transparent, and I want...

I get X, Y, and Z because of it. So I think there is that shift, so I don't know if we'll ever get there completely in our industry. Some products just would never work that way.

[00:18:25] H. Adam Holt: Mm-hmm.

[00:18:26] Derek Notman: But the transparency piece is absolutely Paramount. You would-- We have to have it. We don't go to Best Buy to buy a television if we can't compare the prices.

[00:18:35] H. Adam Holt: Yeah. Right? Well,

[00:18:36] Derek Notman: yeah. We just have to have it out there.

[00:18:37] H. Adam Holt: You're totally right. And today you mentioned it great that people need to be engaged, and not many people wanna be sold anymore. And that's something that we've been talking about for a long time, right? I can do my own shopping, but if you engage me, I'll buy from you because, you know- Exactly

it's a place to business with you. But I've already agreed. I mentally, I understand why I'm doing it. One of the things that somebody said once was if the product companies decided to stop paying the financial professionals completely, would you be able to-- would your clients continue to pay you the same amount directly?

Right? Would they actually understand the value you provide enough- Right ... to say, "Wait, you were getting $15,000 a year in compensation from that company. Okay, I'm now charging you directly." You were paying it, it just you didn't see it. I think what happened is- You

[00:19:19] Derek Notman: just didn't see it.

[00:19:19] H. Adam Holt: Yeah. The, the historical way of distributing financial services was, is and was, it's just so established.

The legacy is so well run. We both know that there's all kinds of companies that, that, that have their fingers in the pot, side deals- Oh, yeah ... selling arrangements. They're-- We don't even understand- Oh, yeah ... half this stuff. There's so much money moving through the system that it's easy to get kind of, uh, kinda we'll just accept it 'cause that's just the way that products work.

I think we're starting to see something coming. I don't know that everyone's gonna love it, but I'm, I'm be really curious. And, and choosing where you sit as your identity, this is why it's important, right? Not just to kinda listen passively. I think it's really important that each of us, uh, ultimately decide what is that identity.

Are we an advisor that sells? Which I think is still critical. We still need to place the solutions, okay? How we get compensated is another question perhaps.

[00:20:13] Derek Notman: Yeah. Implementation is crucial.

[00:20:15] H. Adam Holt: It's crucial, right? But we also need to decide what that marketing's gonna look like. Again, it's gonna be paramount for us kinda working forward together because w- how you market, how you brand, how you build, what you say yes and no to is gonna be critically important based upon what your structure is.

And for those of us that wanna stay specifically in a product solution, become an expert in, let's say, estate planning and life insurance, own it, love it, be it- Yeah, totally. Rock it ... and be transparent about it. That's right.

[00:20:41] Derek Notman: So important 'cause as a consumer myself, I, I go to a website if I'm looking to buy something, one of the first tabs I look for, is there a pricing tab?

Uh, no pricing tab, uh, I'm leaving. I'm not interested, right? Right, so I think we have to have that. But answer, answer that identity question and then own it. I think that's what you have to walk away with at, at that part, part there. I think it's a great way to think about it.

[00:21:03] H. Adam Holt: Very cool. Well, w- one of the things that we've been trying to do in this podcast, and you'll hear us do this again and again, is we open up to the community, is our own version of Dear Abby, right?

Dear Derek and Adam. Talk about something. Now, both Derek and I speak a lot around the world now Yeah ... and give our opinions, good or bad, to a whole bunch of companies and financial advisors, professionals, and this one came in from Chris in Canada, submitted via email. And so you can do this by certainly doing it on social, by LinkedIn, following us, and just sending us a direct message.

Say, "Hey, I want you to address this topic." This one actually comes up a lot, and, and here's what he wrote: "Dear Adam, you mentioned a concern that has been robo-advice taking over the industry and practices. What are your thoughts on this question, and what other r- disruptors do you see?" So I got- let me throw this to you, Derek, 'cause we get this question a lot personally.

What's your perspective on robo-advice, how it's gonna affect both the advisor and the salesman? This is r- or salesperson.

[00:22:00] Derek Notman: Yeah, I, I th- I think this is almost a foregone conclusion at this point. Skynet's not taking over, okay? It's not happening.

[00:22:08] H. Adam Holt: Are you sure?

[00:22:09] Derek Notman: At least in this space, I'm pretty darn sure. I think there was a flash in the pan with robo-advice, and a lot of advisors got scared because it commoditized what we do and took it, the power away from us.

And I think what ended up happening is that people figured out, like, "Well, wait a minute, like, I'm a human being, and robo-advice can only help me so much 'cause a robot doesn't know who I am. They can't empathize with me. They can't build trust with me in a relationship and give me customized advice." So really what I see is robo-advice becoming one of a handful of tools in an advisor's toolbox.

I think that's, in my personal opinion, I don't think there's gonna be any disruption at all. I think an advisor might just say, "Hey, okay, for this client, for this situation, you know what? We should use a robo-advisor. It just makes sense." So now it's, it's almost like we're- it's the roles have been flipped, where now the advisor is in control, and is kinda dangling their hand up top with all their different tools, and robo-advice is just one of them hanging there.

[00:23:07] H. Adam Holt: Mm.

[00:23:07] Derek Notman: So I don't see it as a concern at all, and if anything, it's now just another, you know, arrow in the quiver for us.

[00:23:13] H. Adam Holt: You know, it's interesting. My own thought of this keeps changing. When robo one came out, you remember that, when you said the flash in the pan. What- the first ro- I was like, "No, this is never gonna stick."

Robo two was, okay, wait, we need to add humans to our robo-advice. And we're like, "Yeah, see, we told you that. You needed humans."

[00:23:29] Derek Notman: Yeah.

[00:23:30] H. Adam Holt: Robo 3.0, I think we're starting to see, which is really the fact that financial advisors just adopted and absorbed portals, trading, reallocation, the stuff that's, that should be technified, if you will.

It's the- Oh, yeah ... uh, it's really a form of delegation, isn't it? It's, uh, technology just allows us to do something cheaper, more efficiently, than a human theoretically could have done it. And by the way, we should be doing that. As a society, we- the productivity gains happens when we take our most meaningless or less menial tasks, and we basically automate them, and we elevate people to go work on more important stuff.

That's where we actually deliver more humanity, ironically, is if it frees me up more time to actually be- Exactly ... more human, then cool. That's gonna actually lift more boats. That being said, I really think that we need to be aware here. The growing millennial population that is getting frustrated with the obscurity of the value proposition of a financial advisor, because they don't even go to the banks anymore, by the way.

They don't walk into banks. They don't interact. No. They don't have that human component and connection established with someone who gave them good advice. They might think that they're gonna self-service enough online by just buying the hot Reddit GameStop or whatever, what... And that is financial advice, right?

They're gonna, unfortunately, I think there's a huge population that will never actually interact with a human advisor, and even understand the scope of which we talk about: legal, tax, insurance, investment. They're just not gonna get there, and they're gonna find out too late. And my fear is that the robo-advice will stick.

Get this. The robo-advice technology that's gonna come out is gonna be what? It's gonna be a profitable technology. A profitable technology is gonna do what? It's gonna take the market share of distribution of product away from the people who are getting massive margins. We know them personally.

[00:25:30] Derek Notman: Right.

[00:25:30] H. Adam Holt: So think about it.

As a business- That's- ... the technology that's gonna come out is going to enable distribution of product, not advice If that is what people get to know- Oh, my gosh ... as basically doing financial planning, that will basically perpetuate the same problem that we've been talking about all this program as well as the past 100 years, is that- But at scale

products will drive at scale, low margin, mass distribution. It's whoever can push the most product, that's financial planning, and that would be a travesty. So the irony behind it is that it's not robo-advice, it's robo-sales. The full circle of all this is that what will probably disrupt the financial services industry the most is robo-sales, and I bet you Amazon will do it and Google will do it th- because they have distribution network.

So I don't- That's it ... I, that's why I say I'm not so sure anymore. Robo-advice I'm not worried about. It's hard to make financial decisions, and when there's a high cost of being wrong you want a human. So I think we'll have a place there. Yeah. We have to really decide what our identity's gonna be here, 'cause by the way, we're gonna wanna use those product distribution tools just like the consumer-

[00:26:36] Derek Notman: Well,

[00:26:36] H. Adam Holt: of course we are

'cause it's gonna be economy.

[00:26:38] Derek Notman: Well, think about that. I mean, you're able... Th- we've already had fee compression for years now. And think about this, you have a robo-sales platform marketplace for whatever. So maybe you've met with a- an advisor virtually or in person, and they're like, "Okay, I need this. I paid for my financial plan, but I wanna go to this marketplace now and go buy this thing."

[00:26:57] H. Adam Holt: That's it.

[00:26:58] Derek Notman: Dude, you've just cut out, like, two or three middlemen, if not more. So you're getting your pri- your product at wholesale. That- That's true ... that actually is a massive potential disruption that if I was a product distribution company, I would wanna be paying really close attention to this and get in front of it somehow.

[00:27:15] H. Adam Holt: Well, think about that. A product manufacturer, like a mutual fund company or a life insurance company or an annuity company, they are a product manufacturer, no different than a car manufacturer in a sense. Yep. Their biggest cost is what?

[00:27:27] Derek Notman: Distribution.

[00:27:28] H. Adam Holt: If distribution can go digital, then they don't need agents anymore.

Gone. Which is why if this... If you're asking yourself why does it really matter, guys? It matters because in the future, the way you're paid may not be the way you're paid today. And that's why I'm asking- It's gonna, oh, man ... is the consumer gonna pay for you if the product company doesn't?

[00:27:53] Derek Notman: That's a mind bender.

Mm-hmm. I, I think I can speculate on where that's gonna go, and I would say maybe focus on getting some of those credentials we talked about earlier.

[00:28:04] H. Adam Holt: Maybe. Time to ask that question now before you wind up with this... Technology's moving fast. Both of us have seen this as tech CEOs that- Oh, my gosh ... are board advisors.

This stuff's changing fast. We gotta pay attention. So with that, by the way, thank you, Chris. We will be sending you an awesome Rethink T-shirt so that you can walk around with telling everybody that you're rethinking everybody, and they're gonna say, "What are you talking about?" So thank you. It's gonna be fun.

By the way, you can get one, too. If we ch- if we pick your question, we will send you the coolest shirt that says Rethink across the front of it. Everybody'll think you're a real, uh, game changer or something. Really

[00:28:36] Derek Notman: cool. Yeah, really, really cool.

[00:28:37] H. Adam Holt: Hey, Derek. So are you an advisor that sells or a salesperson who advises?

[00:28:42] Derek Notman: I'm definitely an advisor that sells at this point, 100%. Yeah. You notice how I answered the question without a whole bunch of other stuff first?

[00:28:49] H. Adam Holt: Nice. Well done. I am as well. I know you are. I aspire to be an advisor who helps others, and that's good, buddy. So hopefully you guys, uh, feel part of this.

Remember to subscribe to our podcast and be part of it. Don't be shy. Be part of this conversation. You can get involved by, uh, direct messaging us on LinkedIn. We look forward to being part of your daily routine.

[00:29:10] Derek Notman: You got it. Daily. If you wanna see our f- Well, you can't see our faces, but you can hear our voices.

That's for sweet nothings.

[00:29:16] H. Adam Holt: God will. Take

[00:29:18] Derek Notman: care, buddy. All the best, bud. Cheers, guys.

[00:29:21] Announcer: Thank you for listening to Rethink, the Financial Advisor Podcast with Holt and Notman. Be sure to subscribe now and join the ongoing conversation. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Asset-Map or Connectir.

The content has been made available for informational and educational purposes only.