The "Amazon Effect" is essentially the results of how a digital world has changed business models regarding consumer expectations, interaction, choices, and options. This phenomenon started back in 1994. Since that time, it has changed society as well as many business models in various industries and markets.
The "Amazon Effect" has been such a powerful force and instrument of change. It has altered the competitive landscape as many are stuck in the traditional sales mindset and are ignoring the potential impact of this phenomenon. Those individuals who do not adapt their sales techniques will be quickly left behind when younger generations begin consuming their products and services.
The "Amazon Effect" has been fueled by the creation of an age of instant information in society. We no longer must wait to for printed information to arrive on a new concept or product. We can research the topic, concept or product from our smart phones, tablets or computers and instantly have thousands of files with details and opinions on the topic, concept, or product. This process and utilization has a different look, feel, and impact when we start to look at its effect on various demographic or generational segments of the marketplace.
From a retail or shopping perspective, we don't need to wait or take the time to travel to a specific destination to secure the things we want and need in life. We can simply open an application on our phone, search a specific product, select it, and press "buy." In a few days your order arrives at your door. It's comfortable, convenient, controlled and efficient. You no longer need to interact with store employees to learn about what you plan to purchase. You can read reviews online and buy based on how many stars an item has, instead of having a person help you determine what the best product for you is.
The "Amazon Effect" has changed society in numerous ways for the good and the bad, but it has created an entirely new set of challenges for the financial services industry. One of the first signs of the change was online bot advisors and calculators. The bot advisor marketplace has been fueled by the desires of certain groups to have less human interaction, more freedom of choice without sales pressure, or fear of a conflict of interest. These bot advisors perform money management tasks based on algorithms, as well as allowing the consumer more freedom in the design of their portfolio. This segment of the industry is growing rapidly.The big firms and banks are already blazing the trail by defining the bot advisor marketplace.
What does this mean to the average independent financial professional? A LOT! This means younger generations are moving away from face to face, relationship driven, human experience commerce. Bots may not completely rule the world, but advisors must reinvent their digital presence and functionality. They must implement digital tools, resources, and videos that allow for the consumer to have more digital access, control, and co-creation power when it comes to their financial plan as well as financial future. These new age consumers don’t just want prepackaged content. They want the tools to create their own content. They want co-creation, co-participation and experienced innovation. They want it in an easy, convenient, controlled, and efficient digital platform.
The bottom line is this: The "Amazon Effect" has changed everything, including the financial services industry. Financial advisors must embrace and adapt to the digital age, the effect of technology on prospects and clients, and the world of instant information.
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