Oops! The financial services industry has some toilet paper on its shoe but is still unwilling to look down.

Happy New Year.
2012 marks a major milestone in financial advisor history, but it may take a while before it appears in the history e-books.

Online financial education and advice start-up firm, LearnVest*, (www.learnvest.com) has not only raised $25 million in venture capital, but it has also just launched the first series of prepackaged, e-enabled financial plans that are accessible to the masses and priced between $69 and $349.

How ’bout them apples?

For many years, financial services firms have either been trying to figure out how to reach the masses efficiently OR avoid them completely, focusing on the affluent and wealthy markets. After all, like Willie Sutton said, “that’s where the money is.”

While the rest of the financial services world is waiting for the younger, less affluent people to inherit the money of their boomer parents, LearnVest found a different opportunity.

A presently unmet need.
The need to understand and act on a plan that will help people with little or no money to get out of debt, create wealth and manage it well. The need to trust the person they are dealing with. The need to ask a professional instead of their parent, coworker or sister for guidance.

Suze Orman should check her heels, too. For many years, she and a few others like Dave Ramsey and Jim Cramer have the model that was (until now) the only game in town for the people unserved by the financial advisors. That model is a mashup of opinion, entertainment and generally “unidirectional” dialogue that results in the sale of books, videos and tickets to seminars. Suze doesn’t really make her income from designing her audience’s outcome. Granted, she has helped many people start to get out of debt with her advice. The trouble is, she just doesn’t know who they are. More importantly, what do they do next?

And the “real” financial advisors who offer the plan, the guidance and the products to go with it are busy figuring out how to improve their practice income by continually moving upmarket. Perhaps they categorize their clients into A’s, B’s and C’s, based on their income and/or net worth. And the A’s get most of their attention and represent a single digit percentage of the total market. 

As the news is starting to get out the financial advice world is starting to make statements or have thoughts that sound like:

1)   That can’t possibly be profitable if the advice is any good
2)   That’s not the way to deliver financial advice; it has to be face to face
3)   We’ll just see about that…

If you find yourself making statements like this, consider the notion that these kinds of statements are the three deadly signs of leaders in an industry that is facing its Napster Moment. The Napster Moment, just to refresh, is the moment when a newbie comes in and owns the industry practically overnight. The attitudes include cynicism, sticking to what used to work, and sitting on the sidelines.

Think about it.
What other industries have been Napstered in a similar way? As I write this article, I have sat on a plane and watched commercials on that tiny TV screen for LegalZoom and PetMeds, just to name two. What about Netflix, Shutterfly, ZipCar? What about Apple? Will LearnVest be next on our case study list?

Innovators would ask questions. Questions are so much more powerful than statements because they open up possibility, curiosity and keep you in a perpetual state of wonder.

So the questions that the innovators in the industry might ask are:

1)   What was the insight?
2)   How are they making it profitable?
3)   Will it spill over into the more affluent market?
4)   What will they do next?
5)   What should I be doing to capitalize or even improve upon the offering?

If you find yourself asking these questions and maybe others, awesome. It means you are in the right mind-set for staying ahead and capitalizing on opportunities that fill a real need in the market.

If find yourself making statements, beware.

*Yes, LearnVest is a Maddock Douglas client.

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