The kicker is that they do it at a very low price, fees ranging from 0.15%-0.50%. And that\u2019s the gap we need to close, but not by trading blows. Even if we morph ourselves into this so-called cyborg advisor, the truth is we still can\u2019t compete with these price points. What we need to do is bring to the forefront the benefits of working with a truly independent, human financial planner.<\/p>\n
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So, rather than fight an uphill fee battle, why not showcase the value of independent financial planners?<\/p>\n
It\u2019s called comprehensive financial planning. And I\u2019m not talking about simply helping clients project out how much money they need at retirement and then backing into an asset allocation and savings strategy. These robo-advisors will dominate here (unless of course you are one of the very few active money managers that has a chance at beating the market over long periods of time\u2026 not sure I buy that, but people believe stranger things\u2026 heck, there have been many bigfoot sightings right here in the US). I\u2019m talking about providing clients with insights and perspectives that they don\u2019t know they don\u2019t know.<\/p>\n
Here are just a few\u2026<\/p>\n
Buying a home:<\/strong> Sure, clients can work with real estate agents and mortgage brokers to purchase a house, but are these specialists really looking at the big picture? We support our clients as objective consultants, guiding them through the process: How much should they put down? Where should they take the money from? What are the tax ramifications? And then later down the road we help them decide whether or not to refinance, take out a home equity loan, etc. Mr. Robo ain\u2019t doing that.<\/p>\n Investing in assets outside the stock market:<\/strong> Many people look at the stock market as the only place to invest for the future. Yet we know that diversifying your investments goes far beyond that. Who\u2019s going to help clients decide whether it makes sense to invest in a rental property or buy a REIT? How about art, wine or coins? Does it make sense to invest in private equity, hedge funds, managed futures?<\/p>\n Philanthropy:<\/strong> When do you think the robo-rousers are going to be able to support a client\u2019s philanthropic vision? Last time I checked, as humans, we add tremendous value here. Through conversation, we can support this vision, touching on values, legacy, estate planning variables, etc.<\/p>\n Others:<\/strong> What about cash flow management, paying off debt, college planning, and even accountability (holding clients accountable for taking the necessary actions)? No machine is going to beat the personal touch when it comes to these categories. Building personal relationships and becoming a trusted advisor to a family goes much farther than saving a little bit of money on investment management.<\/p>\n Does this new player in the space mean that many firms may have to streamline their process and see where they can cut costs? And does it mean that advisors who have had their investment strategy on autopilot might have to start proving their worth? It sure does.<\/p>\n Let\u2019s not forget that these new companies are doing all the grunt work of testing various technologies and bringing to market those that work. We can take advantage of this and use it as momentum to catapult ourselves ahead.<\/p>\n Case in point:<\/strong> Betterment is actually looking to provide their technology platform to advisors. Oh, and by the way, they are willing to private label it too. What a gift! Young agile shops and mature dynamic firms can ride this wave, double their efficiency and hone in on their niche.<\/p>\n The key word is \u201cvalue.\u201dTake Advantage of the Momentum<\/h3>\n
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