The Bar for Advisors Has Been Raised: MyVest CEO

Due to a variety of complex and interrelated factors, the services of financial advisors have never been in greater demand, according to MyVest CEO Anton Honikman. At the same time, advisors have never faced so much pressure to evolve and elevate the way they do business.

Especially when it comes to serving wealthy and sophisticated clients — i.e., those for whom wealth management professionals can do the most and who also deliver the most value back to the practice — advisors are being asked to do more and more.

As Honikman recently told ThinkAdvisor, clients are coming to expect their advisors to be able to connect and support all aspects of their financial lives, from building retirement portfolios to mitigating taxes to enacting estate plans. And, they are expected to do all this for a reasonable fee and in a way that serves the client’s best interest.

Wealth management clients also have more choices than ever with respect to the type of firm they work with as the lines blur between the traditional advisor industry silos and as more top teams break away from the big wirehouses to start their own independent specialist shops.

To put it directly, Honikman says, the bar has been raised for advisors competing in the marketplace today, and it’s unlikely that these trends will abate any time soon. The good news is that firms and advisors also have more places to turn for services and support.

As Honikman explains in the conversation below, all of these factors make 2023 an “incredibly dynamic time” for the wealth management industry and its practitioners, and those firms that are willing to question older ways of operating in favor of emerging best practices will surely find the most (and most lasting) success.

THINKADVISOR: Do you agree with the suggestion made by other investment industry leaders that the financial advisor’s client is expecting increasingly sophisticated service? 

ANTON HONIKMAN: I would say that client expectations are being elevated by their digital experiences elsewhere, like e-commerce and media.

New advice-consumption expectations include real-time alerts and just-in-time delivery of information, synchronous and asynchronous collaboration, data visualizations, digital fulfillment — and the smart, personalized curation of opportunities.

This raises the bar for advisory firms to invest in their tech stack to deliver on these expectations, especially for the next generation of clients and advisors.

Why do you think tax management is gaining a more prominent role in the overall financial planning and portfolio management processes? How does this help improve client outcomes? 

One big driver of tax-managed investing was the robo-advisors’ promotion of tax-loss harvesting.

One of the main catalysts for broader adoption has been the growing availability of technology that can make tax management more comprehensive, systematically applied and scalable than one can achieve with hand-crafted portfolios.

By “comprehensive,” I mean more than just tax-loss harvesting; it can include asset location, smart gain deferral, best tax lot selection, household wash sale management, transition planning and more.

Expanding on the prior question, do you expect more advisors and clients to utilize direct indexing capabilities as a means of achieving more tailored portfolios and greater tax efficiency at scale? 

I expect direct indexing to continue growing, but likely at a slower rate than initial expectations, because decent alternatives exist for most accounts that are high quality, tax efficient and lower cost, in the form of exchange traded funds.