Broker Check

Human Financial Advisor? Robo Advisor? Do-It-Yourself?

| December 06, 2015
Client Relationships

Single product / service?
Big Picture (Holistic) advice?
How many households?  

With apologies and thanks to Financial Planning magazine and Bob Veres, the author of the article linked below.  At the beginning of the article, “Rip Van Planner” (aka Rip Van Winkle) awakes from attending a conference in November of 2015 and finds out that it is now December of 2022.  At the end of the article, Rip Van Planner asks: 

“How did I become an anachronism in seven short years?” … the author’s answer … 

“You slept through the biggest, fastest transition in the (Financial Planning) profession’s history,” was the reply. “But don’t feel too bad; at least you have an excuse. A lot of advisors who claim to have been awake are still as stuck in the past as you are.”  

Because Financial Planning magazine is a trade publication, I have left out some of the author’s points that are more “inside baseball” than a current or future client might be interested in ... But here are some that might be of interest: (Please note this is a futuristic prediction ... not widespread current reality.)

  1. No more Quarterly Reports
    (All info … including progress against each client’s goals as shown in their Financial Plan … updated in real time on company website.)

  2. No more compensation as a percentage of Assets Under Management

  3. No more commission compensation
    (Joined the Professional Association that required not taking commission compensation.)

  4. Professional Financial Planning / Consulting fee compensation only ... compliantly, of course!

  5. Far fewer face to face meetings
    Virtual meetings using latest technology.  Clients have no geographic limits on where they live (planners compliantly licensed … of course.)

Some "Robo" Advisors might be providing a technically competent and compliant service or product to a very large number of people.  Perhaps 1000's of households. That's the point, isn't it?

Some licensed financial Salespeople might have provided 1-2 products and / or services to 400 ... 500 ... even 600+ households.  These products and / or services might be of great benefit to the client.  But it might be difficult ... even impossible ... for one licensed financial person to properly address Big Picture issues like The Holistic 46 Point Checklist for 400 or more households. (Do the arithmetic if you happen to work with an "ensemble" of two or more licensed financial folks.)

Many clients have Big Picture (Holistic) Planning that is incomplete or ... worse .... not meeting their own goals.  The Holistic 46 Point Checklist shows many ... but certainly not all ... of the topics some people are interested in ... or should be!   

Holistic or Big Picture planning is not for everyone.  It takes more time.  It's not really ever "free," even though the cost might be "included" in a larger fee than charged by other human or especially Robo advisors.  And it requires the client to provide the Holistic Professional with relevant, comprehensive and up-to-date facts, goals and documents.

If you are Doing-It-Yourself, you will likely have separate communications with one or more Attorneys ... Tax experts ... and of course, Financial Folks.  (The research shows a good chunk of the public has their money spread out in multiple spots ... perhaps both Human and Robo.)  For you to obtain a competent Professional Opinion on your Big Picture, you would have to coordinate and supply all the up-to-date facts, goals and documents to the Professional providing the opinion. That coordination is a lot of work.  Most people fail at keeping this manual coordination updated and accurate. If that is your case, then you (and perhaps your spouse / partner) are the only one(s) who could even potentially understand the Big Picture!

You have more choices than ever when it comes to financial advice, products and services.  If you are like many of us, you like a buffet or smorgasbord.  But it might be more difficult to meet your health goals if you eat at one too frequently.  (It would be for me!) Get the facts.  Especially about how your own Big Picture looks right now.


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