Advice just needs to tell the time properly, whatever the watch looks like

I recently heard a very insightful analogy, whereby someone predicted that in the future, full-service advice would become the equivalent of a Patek Phillippe watch – expertly engineered, painstakingly assembled, and deeply valuable to a tiny subset of people.

It reminded me of the concept of Veblen goods; luxury items that defy standard demand laws, where higher prices increase demand because they act as status symbols. Full-service advice, so regarded, will always survive and even appreciate in value for those lucky enough to avail themselves.

The whole idea got me thinking. It’s also a great analogy in a broader sense to describe how advice delivery via technology – in effect, which watch clients need/want – isn’t necessarily as much of a race to the bottom as some might have it.

A step down from John Q. High-net-worth, for instance, you’ll still have clients who want the likes of Rolex or Omega – precision manufacturing rather than individual craftsmanship. Still high quality, still aspirational, but more standardised, more scalable.

Then you’ve got your Seikos or Timexes – reliable, functional, affordable. They tell the time perfectly well, and for most people, that’s enough. This, arguably, is the real growth area where technology alongside the idea of targeted support is going to have the most disproportionate impact, and that’s a good thing – they’re not going to be buying expensive watches any time soon anyway.

And of course, if we’re going to situate this analogy accurately and pay due attention to the upcoming cohorts, many people – especially young people – don’t wear a watch at all anymore. They just use their phone.

It strikes me that fears around the inexorable advance of technology seem to be predicated on the idea that every client should ultimately be evolving towards something close to the Patek Philippe experience: full-service, highly personalised, deeply involved advice.

And the reality is that for some clients, that is and will 100% remain not only absolutely appropriate, but also desirable – complex situations, significant assets, nuanced planning needs. One wonders whether levels of service in this stratum will become the true selling point – at the risk of sounding mildly facetious, some clients will always pay for some good old dreadful toadying!

This wouldn’t be undignified, or some sort of diminishment of the profession; rather, it would simply be an evolution, with some advisers offering high-value, highly personalised service, and explicitly positioned their offering as such.

While at the other end of the spectrum, technology will be designing newer, less expertly tooled, but cheaper watches. Or put another way, simpler, lower-cost propositions for clients whose needs are more straightforward.

Ultimately, Patek Phillipe watches haven’t been superseded by Seikos, because the concept of value is a compelling one. Neither will all forms of advice, providing they all tell the time accurately.