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Where RIAs Go From Here: American College CEO

By John Manganaro

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What You Need to Know

  • The future of the advisor industry belongs to those who can put relationships and problem-solving ahead of products, says George Nichols of the American College of Financial Services.
  • The natural outcome will be more specialization and team-based advice.
  • While optimistic, Nichols views diversifying financial services as a long game.

Financial education remains both a predominant need in the advisor profession and a prevalent gap in communities still underserved and unengaged by the financial services industry, and in the words of George Nichols III, CEO and president of The American College of Financial Services, these two trends are set to intersect in a big way in the years ahead.

Nichols, who has spent nearly five years at the helm of The American College, recently sat down for a wide-ranging discussion with ThinkAdvisor, during which he reflected on the past and present of his organization and its evolving role in the world of wealth management.

As Nichols points out, The American College is quickly approaching the 100th anniversary of its 1927 founding, and the upcoming milestone is prompting a sense of excitement and expectation about what comes next.

This anticipation, Nichols notes, is also reflected broadly across the advisor industry, with big questions being asked about the best ways to serve clients and to organize and operate rapidly evolving firms.

“I am honored to this day to have this opportunity to lead this unbelievable institution as it approaches such a big anniversary,” Nichols says. “Not only are we still around after almost a century, but we are still relevant. When I took the role, it was already so clear that the financial services world was changing, and that continues today.”

Accelerating Evolution

According to Nichols, the rapid pace of industry evolution can only be a good thing, because nothing that grows stagnant can achieve lasting success and consequence — whether an educational institution like the American College or an advisory firm or asset manager.

“We have been decidedly hard at work pursuing the disruption of several financial services industry and education norms, including democratizing financial education and diversifying the financial services industry,” Nichols explains. “We are proud to share our progress in these areas, as they are critical to our mission to benefit society.”

Ultimately, Nichols argues, advisors can see their own need to evolve and elevate their approach reflected in the work of The American College.

Like the college, Nichols says, leading RIA firms are incorporating specialized knowledge into their career development plans to create collaborative ensemble team practices — practices that can provide a service experience that better reflects the evolving face of American society.

As a result, he says, today’s most successful RIAs are effectively delivering comprehensive and complex financial planning services and introducing new business and service models that continue to elevate the profession. This work is essential, Nichols says, given the rapid demographic change the country is experiencing and the intensifying expectations of consumers across all walks of life.

Toward Planning and Away From Product

According to Nichols, perhaps the most important way these trends are playing out in practice is to see leading financial services firms begin to truly shift their focus “towards what the client and the community need as opposed to what advisors are expected to sell.”

“Don’t get me wrong, advisory firms need to have a positive incentive to earn a profit,” Nichols says. “What I’m talking about is more of a reflection of the simple fact that, at the end of the day, the old way of doing things doesn’t give clients what they need. What they need is an advisory experience that is based on their point of view and their understanding of what wealth means.”

This is especially true, Nichols says, when it comes to the industry’s historic failure to connect with underserved and underrepresented communities — namely women and Black and Hispanic Americans. For too long, he argues, advisors have come to the table with a monolithic and monocultural perspective about wealth and the purpose of saving and investing.

“This is why you see so many widows leaving their late husband’s advisor, and why you see so many kids in the next generation do the same thing once they inherit money from their parents or grandparents,” Nichols says. “We need to help advisors understand these trends.”

As Nichols explains, advisors who base their approach on identifying their clients’ real goals, deepening their clients’ financial knowledge and creating family- and community-oriented relationships will thrive in this environment.

“If you are good at doing that, you should be able to work cross-culturally and with different generations,” Nichols says. “If your go-to skillset is selling a specific product set, that’s the kind of thing that really pushes away the next generation or a widowed client. It’s just going to be a challenging and interesting time, in the next 10 or 15 years, because the face of the industry has to change.”

According to Nichols, there is a lot of opportunity implied by these trends, because the advisor population today is older and it skews significantly white and male. In another 10 or 15 years, many of these people will themselves hit retirement, and there is going to be a big vacuum to fill.

“The advisors who are going to fill that space are the ones who can lead with relationships and speak to diverse communities about their evolving needs,” Nichols argues. “These advisors will be really successful, because they will have figured out that there is a tremendous need here. A lot of their success will come from that ability to specialize and to connect with the client.”

No Advisor Can Know Everything

Nichols suggests another natural outcome of these pressures will be both greater specialization among the advisor force and an increasing prevalence o fa teams-based approach.

As Nichols observers, it’s very rare to have someone who has both the client-facing skills and also a deep knowledge of all the different aspects of financial planning for all the range of different client types. Estate planning expertise, for example, is a whole sub-field that requires lots of in-depth knowledge.

Therefore, Nichols says, having different team members that can dig into the different areas a bit deeper can put a firm in a great position for success. And, as Nichols emphasizes, a successful team-based approach can be expected to deepen, rather than dilute, the client’s relationship with the firm and its advisors.

“I believe these trends are going to lead to more team development, because that’s just going to be necessary to be able to serve clients well across all the areas in which they expect support,” Nichols says. “Nobody can really argue that they know all of this stuff.”

A Word on Diversity

As he has emphasized in prior discussions and in his own writing, Nichols views diversifying financial services as a long game, with marketplace disruption the primary catalyst.

Since launching the American College Center for Economic Empowerment and Equality and the Four Steps Forward initiative in 2020, Nichols has worked with hundreds of organizations and had numerous conversations with CEOs on diversity, equity and inclusion initiatives.

As a result, he attributes the industry’s slow-moving progress to several variables, including unyielding corporate cultures and DE&I not being recognized as a business imperative. He hopes and expects these patterns will improve in the years ahead as organizations like the American College continue to press the message.

While yesterday’s CEOs may have overlooked the strategic business case for DE&I and tended to focus on the importance of such initiatives for employee morale, Nichols argues they can no longer ignore the business imperative.

The United States is rapidly becoming a majority-minority country, he points out, and any advisory firm that cannot respond quickly enough to that fact risks falling behind.

Pictured: George Nichols accepting a ThinkAdvisor LUMINARIES award in 2022.

John Manganaro

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