And the Evolving Financial Advisor 

It happens a lot— an“expert” passionately lectures, declaring a better way and planting seeds of FUD (fear, uncertainty, and doubt). Later, it’s exposed that they weren’t following their own advice. When alone, without their pulpit, these authorities ignored their own ideas, or worse, did the opposite.

Occasionally, this hypocrisy comes to light, but often it doesn't. This occurs in medicine, politics, religion, and, yes, finance. I know it’s shocking, but it's true. Some financial professionals pitch products, recommend investments, and hawk programs they wouldn’t dare recommend to family members or friends and certainly wouldn't consider themselves. Still, they have no reservations about putting their clients in such investments. 

Why?

Money, Money, Money. 

“Follow the money.” That’s common advice given to those trying to unearth bad behavior or scandal. For years the industry didn’t always incentivize financial professionals to put their client's needs first. Fortunately, this has come a long way, but many businesses are still built on compensation from selling over-priced, confusing, and often unnecessary products. 

Scale

As any business grows, it’s important to scale efficiently. Unfortunately, some advisors put business growth ahead of client interests. Minimal effort is needed to invest assets into programs requiring little oversight and maintenance. Sometimes, such programs are in the client's best interest, but sometimes it’s only in the advisor's best interest.

Worry not; times are changing. 

The role of the financial advisor is evolving from authority figure to financial partner and sounding board. It’s no longer expected, much less required, for advisors to rock wide pinstriped suits, lease corner offices in high rises, and work diligently to insert financial jargon into every conversation. Clients don’t need to dread meetings as they would having a cavity drilled at the dentist. Instead, clients can happily anticipate meeting with their advisors to discuss their future, talk about their aspirations, and seek guidance when needed.

In addition to modernized expectations, technology is doing what it does best, solving problems, and the finance industry has been a primary beneficiary.

What has this done for the modern advisor?

Eased administrative pain points

If you enjoy paperwork, you’re a special kind of demented! Opening accounts, moving money, providing statements, tracking compliance…these tasks were destroying trees by the forest and distracting from the most valuable elements of financial advice and investment management. While these areas still require time (and occasionally a piece of paper), the processes have improved immensely thanks to innovative people working hard to make financial advisors more valuable and accessible. Maintaining the status quo will limit some advisors, but others will embrace new technologies and find new ways to provide better, faster, more engaging services.

Today I can open accounts with relative ease, no hard-copy paperwork (most of the time), and minimal disruptions to the client, usually in just a few minutes. This is vastly improved from the days of sending paperwork back and forth, being forced into multiple revisions due to small errors, and waiting impatiently for the mailman to return the documents. 

Created affordable access to powerful tools

Data dominates our world, and clients expect access to current financial data when creating plans and managing investments. Big finance used to have a stranglehold on data, but again, this is changing. As an independent firm, I have current information at the tip of my fingers without spending tens of thousands of dollars a month. Stress-testing portfolios, back-testing strategies, comparing investment performance, evaluating correlations, and more is less time-consuming than ever, increasing the capacity to serve.

Eased the burden of being independent

Embracing technology enables me to treat every client’s investments like my family and friends…and, yes, even my own. These technological tailwinds aren’t slowing anytime soon. In fact, I believe these changes will transform the financial services industry from one of the most loathed to one of the most beloved; 

• one that’s accessible to people at any stage in their financial life

• one with more personal and meaningful interactions

• and one in which advisors are incentivized to do better for their clients.

These developments are mutually beneficial. Clients can receive better service, more useful advice, clearer communication, an improved culture, and a more meaningful relationship with their advisor. Advisors can be more productive, serve more clients, and customize their businesses to match their personalities and values. It’s exciting to think about the future, both my clients’ and my business. Success breeds success, and I’m happy to seek and implement means to improve my value continuously.

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from James Vermillion, and all rights are reserved.