The “Eminence” Business Model

Financial planning as we know it will die.  Why?  For the same reason the traditional role of doctor, lawyer, engineer, priest, minister, rabbi and imam will change  Their value proposition relies on the “eminence model.”

Consider the word eminence.  It means 1) a position of great superiority or distinction, or 2) a person occupying such a position.  At one time a priest could occupy that place because they were likely one of only a few people in the neighborhood who could read. Hard to retain that eminence.

Today, lawyers know the law.  Doctors know about health and treatment.  Financial planners know about organizing money over time.  Clerics provide spiritual guidance.  Each is eminent within their realm.

All of these professions will become less so as tools become available to access and understand the specialized  information.  Need a will?  There’s an app for that.  Heart Attack.  An app.  Someone to listen to your fear.  Another app.  History of the New York stock exchange performance since 1921.  No problem.

Any profession or calling that relies on their clients to have less access to information than they do, and to turn over control of direction, will find it difficult to prevail as an eminence.  Access to information levels the presently constructed playing field.

Nonetheless there exists an important role for former eminences.

Information may be readily available but it is not readily useful.  It is not well connected to knowledge, meaning and relevance.  A significant portion of internet information is biased or wrong.  Wrong information that you believe is worse than no information.  With none, you can be right by accident or be forced to use an eminence.

Information must be part of a knowledge system where it “fits.”  Fit leads you to other information that may condition the validity of a particular bit of information in your special case or draw you to new insights.  Knowledge will be harder to get than information, but those that work at it, or better, who acquire the services of a “guide” will succeed.

What will work for one may not work for others.  The purpose of the guide will be to assign meaning to the information at hand, to provide other information, and to demonstrate what may best fit the client’s unique meaning.

There will be new skill requirements on the part of both the practitioner and the client.

Practitioners will, as they do now, keep up to the product inventory and the rules that govern our society.    At the same time they will be forced to become more patient and questioning.  More counselor than advisor.  Often challenged.  Committed to an ongoing and long relationship.  A guide.

Clients will be forced to become financially literate.  Not literate in the sense of knowing the interest rate on credit cards, but rather in the meaning of money and how it flows over time.  What makes more.  What diminishes it.  What constitutes risk.  The ones who rely solely on facts from the internet will fail.  The ability to assess meaning will become a condition precedent.

Financial planning will become a symbiotic relationship between client and advisor wherein the advisor will be an assistant.  The voice of reason.  The conscience.  The seeker of methods.  The form preparer.  The parent sometimes.  The client will be the informed decision maker.

The trend is already beginning and cannot fail to express itself.  Medicine is well along the path.  Medical literacy is still in short supply but improving.

No business model lasts forever.  The decline of the eminence of clerics and kings is good evidence that eventually the calling must match the needs of its users.  It will not happen quickly but it will happen.  Start preparing now.

Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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One Response to The “Eminence” Business Model

  1. I have long committed most of my time into teaching clients about the financial industry,the products,the process and the regulations that govern the advice industry.Though it is time consuming but it is worth it as I have informed clients who understand the service provided.I have long still felt that the companies should at least do their part in client education because it is better to provide service and products to clients that are better informed rather than chasing targets that will not last or will soon fall off the books or lapse as soon as the hype around the product subsides.We have a role to play in the industry it is up to us to keep updating our skills to match the upcoming changes and challenges.Thank you Don.

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