The pandemic has transformed the client-advisor experience

The coronavirus pandemic has forced businesses of all kinds to rethink how they work and interact with customers.

Financial planning is no different. 

Martin Seay, president of the Financial Planning Association, perhaps knows better than most how financial planners have adapted their practices to Covid-19. With more than 21,000 members, the FPA is the largest membership organization for financial planners.

Seay, a certified financial planner who is also chair of the Personal Financial Planning program at Kansas State University, spoke with CNBC — in a safe telephone interview — to discuss how advisory firms have shifted, what the FPA has done to help and the transformations that are likely to remain after the crisis abates.

This interview was edited and condensed from a longer conversation.

CNBC: How have financial advisors’ practices changed as a result of Covid-19?

Martin Seay: Advisors are learning technology. They’re learning the beauty of Zoom.

Firms have been able to adapt through the use of virtual technologies to keep their meetings going with clients. That comfort will probably change practices into the future. Even though things are loosening up, a lot of clients are of the demographics that are most at risk for Covid-19. So they will continue to be operating like this for quite a while.

CNBC: Is that the largest change to advisors’ practices, the inability to really meet face-to-face?

MS: I think that has been the largest disruption. A lot of advisors went through a number of difficulties in terms of firms not being set up for virtual dial-in. They have offices that, if you were there, you could work. But not all of them have embraced technology to work from home.

CNBC: And now they’ve had to?

MS: They’ve had to.

CNBC: What has the FPA done, or what is it doing, to help advisors adapt their practices?

MS: We’ve had to rethink our delivery models for everything. We’re built off a chapter network that’s built off in-person conferences and meetings. We’ve had to rethink everything about how we can present information in a timely manner through a digital format.

One of the first things that we came out with as a response is the Volatility Resource Center, which is a database of research and practitioner-written articles about how to work with clients in downturns and how to best support clients who are feeling stress. It’s a mix of technical content and then a lot of behavioral content.

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We overlaid that with the Navigating Market Turbulence Community. The community is built around planners talking to planners, an interactive dialogue of people sharing what they’re seeing in real life. One of the most important pieces of that has been our biweekly Planner To Planner [sessions]. These are conversations being led by thought leaders in the space who are sharing what they are doing in their actual practices right now.  

CNBC: It’s specifically geared toward questions around Covid-19?

MS: Correct. Those are all a direct response for how to work with clients in response to Covid.

CNBC: How has client experience been impacted as a result of the coronavirus?

MS: A lot of advisors have talked about wanting to give virtual a go. This has really changed that comfort level for communication and how clients want to meet. There are far more 70-year-olds comfortable with getting on a Zoom or Skype now than there used to be, which will change the service model moving forward.

I think many advisors still have offices and would be happy to meet with clients there. But I think there will be far more virtual meetings moving forward as everyone has gotten used to it being a medium where business can be conducted.

CNBC: Has theadvice to clients changed at all as a result of Covid-19?

MS: They will continue to focus on the importance of financial planning over investment returns. Advisors have already been strongly shifting away from investment returns in their selling points and focusing more on probabilities of success.

A lot of advisors have small business clients. There are a lot of advisors providing guidance on Paycheck Protection Program loans, how to support employees, keep them employed, and make sure that business is going to be viable on the other side. You see more depth of that engagement.

The other really big issue is, a lot of advisors did health insurance planning especially around those bridge years when you weren’t eligible for Medicare yet. But more are having to delve into that space in an emergency scenario, dealing with Cobra in many cases. These [employment] transitions that have occurred unexpectedly may lead to an early retirement for some folks but may also require some planning to mediate those impacts until they find gainful employment.

CNBC: Are there cybersecurity concerns with respect to shifting more virtual? 

MS: You saw that with Zoom. Zoom worked fine, but when it was under stress the security got hacked, and pretty quickly too. It didn’t take long before “Zoom bombing” became a pretty common occurrence. As advisors use this software more regularly, it will create another level of liability. Advisors will have to step up and make sure their clients are protected.

CNBC: How has the FPA addressed advisor internship programs?

MS: One of the things we’re most excited about at the national level is our ‘externship’ program. It’s brand-spanking-new. The idea didn’t exist eight weeks ago.

This eight-week intensive is for students who had internships that got canceled, couldn’t get an internship or maybe graduates who didn’t find a job. We also got a lot of career changers.

It will be a topic area a week, whether it’s investing, retirement, estate planning. There are going to be 20 firms to 25 firms that open their doors and share, ‘This is how we deal with this topic area with clients in real life.’ The experience is qualified for 160 work-experience hours for the CFP [Certified Financial Planner Board of Standards] Board.

For internships, you’re at one firm. You’re getting to know that firm really well. This externship is like a survey of firms. These folks can see how firms deal with different topic areas and help them to understand the financial planning landscape. This has hit [more than] 500 enrollees. This will close June 1, when this starts.

CNBC: Do you think that this gives someone a better experience than an internship?

MS: I don’t know if it’s better or worse. But it’s different. The internship is only as good as the firm that gives it to you and the amount of time they have.

Some internships are very good. Some internships are not. So I think it’s a different experience. Probably if you had one of the best internships in the country, you’d want to do that. But there are a lot of internships where maybe you don’t get into how to do financial planning. You might do paperwork. You might support the advisor.

But you don’t get into the process of doing. I would view this as not necessarily a replacement, but a complement to an internship. My dream, for example, would be you have students after their sophomore year do this externship program. After their junior year, they do an internship. And you’re going to have somebody that’s ready to enter the workforce.

CNBC: What are you doing relative to conferences at the local chapter and national levels?

MS: I’d say the vast majority [of chapters] have started holding Zoom chapter meetings. They’re either doing the [continuing education] via Zoom or they’re doing happy hours. I support both (laughs).

For example, the chapter in Nebraska is actually going to start meeting more frequently than they did before, but doing it via Zoom, so that they are really there for their members during this time. They’re going to go to biweekly instead of monthly.

Some chapters have gone virtual [with their conferences]. For example, the FPA NorCal [Conference] will go on next week. It will be in a completely virtual format.

FPA annual is not until September [and] we have not yet made a call on that. But we have had to cancel conferences like FPA Retreat and FPA NexGen. We’re trying to be very careful. These conferences are not about CEs. They’re about collaboration. We don’t want to just stick them up on Zoom and say it’s the same thing.

CNBC: How are you helping underserved communities at the chapter level? Are advisors or planners doing any pro bono work?

MS: We started a database of advisors that are willing to provide pro bono advice during this time. It has members from all over the country.

We work closely with [the Foundation for Financial Planning] in supporting those pro bono events.

CNBC: Are there things you think will remain in place post-coronavirus?

MS: I think this is innovation that will stick. It’s gotta stick. Because these are avenues that will always be useful to our members.

We’ll go back to in-person conferences. But I think we’ll seriously consider always having some sort of virtual overlay to that. My hope is that [the externship program] becomes a pillar of the profession moving forward.

And related to the virtual communities of our Volatility Resource Center and Navigating Market Turbulence, you know, the topic will change. But those venues are going to be there, whatever the topic may be, to help our members moving forward.