031: From Stock Brokers To Robots?: The History And Future Of Financial Planning

 

The value investors derive from financial planners is changing drastically in the digital era, driven by a broader availability of information, the proliferation of automated investment tools, and expanding communication channels. The old mahogany desks and formal attire have been replaced with minimalist office spaces, younger, more tech-conscience advisors, and even automated, or “robo” advisors that can crunch the numbers much faster. Even more revolutionary is the expanded focus on life planning. Life is not just “death and taxes” anymore, but clarifying and achieving your most meaningful and deeply felt aspirations. On this episode, Dustin R. Granger, CFP® and I talk about the history of the financial planning industry, and share where we think it’s headed in the future!

Here’s What You’ll Learn [1:30] The future of the financial planning industry. [3:45] This generation does financial planning differently [4:30] How relevant are stockbrokers in today’s financial landscape? [5:30] The online revolution changed the game [8:15] The positive effects of the Index revolution [11:00] Here’s why Clients that had a financial plan were much calmer during the recession [15:00] Are robots running your finances? [19:15] The numbers don’t lie: A Vanguard study on the value of financial advisors [24:15] The focus on life planning [26:30] 3 scenarios that will help you clarify what is most important [31:00] The Tech Effect: Financial planning, a 1000 miles away [36:00] Toujours Worth Software - Guided Wealth Portfolios [38:00] Worth It Inspirations The Index Fund Revolution

Index funds are simple, low-cost ways to gain exposure to markets. They’re most commonly available as mutual funds and exchange-traded funds (ETFs). While stocks, bonds, commodities and real estate have been around for centuries, index funds have revolutionized how investors access these assets. Technology has made it possible to index strategies that were once only the province of active managers that isolate factors like value, growth and low volatility. Most financial planners leverage these indexes and include them as an investing strategy for their clients. The benefit is the client has access to a broad investment portfolio, as a part of a larger financial plan.

Financial Planning Revolution

Investing and planning for one’s financial future is a very personal experience that relies on more than simply allocating funds across a variety of asset classes. During a recession or a period of extended volatility, many investors find reassurance in being able to pick up the phone and speak with a personal financial advisor to make sense of the current situation and lay out a plan for going forward. The investor/advisor relationship requires a critical balance of emotional support and practical thinking, being a support system and providing counsel on how to make financial decisions that give the investor a competitive advantage over the rest of the market.

The Robo-Advisor Revolution

For younger investors who are just beginning to build their financial profile and want to save money, using a robo-advisor can provide an effective and cost-efficient way to get started. Robo-advisors can also help individuals with smaller savings or simplified tax circumstances save for retirement. Investors looking for more personalized long-term management may find that working with an advisor, preferably a certified financial planner, better provides them with investment and financial planning advice.

Life Planning

This may sound elementary but few of us spontaneously undertake a thoughtful inquiry into our deepest and most enduring values and objectives. Traditionally financial advisors have focused on the numbers—budgeting, investments, taxes, or insurance–without exploring the broader context. They rarely ask questions like: “If you had more time or money, what would you do?” “What do you want to accomplish or attain so you will feel that you’ve had a life well-lived?” “What moves, touches, or inspires you?” We call it life planning because what’s really important isn’t your money, it’s your life.

Resources & People Mentioned Life Planning Template Vision Worksheet Toujours Worth Software - Guided Wealth Portfolios Worth It Episode 2 Worth It Episode 25 Connect With Danielle and Dustin Ask your questions! On Facebook On Twitter Connect with Dustin on Twitter: @DRGranger