According to the Oxford dictionary, an assembly line is a merger of workers and machines to produce in bulk, a product of no unique or otherwise customized substance. In our previous article, we noted that advancing technology and consumer empowerment has led to a self-checkout or “do-it-yourself” mentality. While every consumer will approach financial planning from their own unique set of circumstances, the desire to improve one’s financial health remains a universal concept, but the financial needs of the individual (or family) require an otherwise unique and customized approach.
Historically, financial planning has been a privilege of the affluent who required assistance with not only maintaining but with growing their wealth. The client’s money would be provided to a money manager who in-turn would invest or purchase financial products that could help protect or grow wealth. As time went on the barriers of entry and cost came down so that a wider audience of consumers had an opportunity to participate in building wealth through investments. Even with the advent of lower-cost financial planning, the model of receiving in-person advice from a licensed financial representative or at least by a customer service line remained the norm up until just a few years ago.
The age of the Internet brought with it the ability to have everything delivered to you with just a few clicks of a button. It was only a matter of time before financial advice, services, and products would be available for online consumption. The ability to deliver financial information and financial products through digital delivery has typically meant lower costs for consumers. However, just as the generic bag of chips on the shelf may seem as filling as the more established brand, sometimes that cost is offset by replacing some of the content of that bag with plain old air.
In an age where information is free, readily available, and in abundance, the issue becomes sorting through all of the different advice offerings and opinions out there and determining what is right for you. While groups such as the CFP BOARD and the FPA® Financial Planning Association seek to educate the public while advocating for more ethical standards in the industry, confusion amongst the public remains high when choosing the right financial advisor. This change in the advice industry begs the question of what has fundamentally changed and what has stayed the same.
So you say you want a revolution…?:
Well, the robot uprising that film franchises such as Terminator and The Matrix have famously depicted, has arrived, but in a less threatening form, they serve not as our masters but as our Robo-Advisors. Robo-Advising is less world-ending doom, and more of a movement toward providing financial advice (primarily investment advice) through an online interface, often with little to no human interaction on the consumer end. In this model, it would be as if you are buying a suit or a dress online. While the clothes may fit fine, because most folks understand their general measurements, it may lack the overall quality that having an in-person tailor may provide to ensure that everything is measured just-so, and hemmed in a custom fashion. While numbers are vital in financial planning, and human error is a known side-effect of not joining the robot uprising, they don’t always tell the whole story. Robo-Advisors often focus on only a few aspects of financial planning such as investment analysis, or retirement planning, but miss the mark on providing comprehensive planning in any other aspects of one’s financial life. Robo-Advising thus can provide some value, and has been revolutionary in providing well-thought-out investment analysis to the masses at a low-cost, but it may be stretching the truth to claim that it is a “financial advisor”. The advice in many ways is a financial product versus a comprehensive financial plan where unique needs such as complex family planning or a desire to participate in socially responsible investing may not be available.
The traditional method of meeting face to face with individuals is still alive and well. Some may prefer the benefit of meeting with a person they have a relationship with who can handle some transactions on their behalf. It’s true that when you are entrusting someone to either manage your assets or provide insight on how to continue to build wealth, developing a relationship with the steward of your financial well-being is just common sense. That human connection, however, does not have to come with a hefty price tag, and in fact, it’s because of the Robo-Advisor revolution that technology has come a long way in making financial advice ever more affordable and accessible. In fact, many advisors have long since deployed a “Robo-Advisor” of their own.
Take for example how the modern car industry has married together technology with people. While today’s modern car may be mass-produced, you can still customize your vehicle to fit your individual needs and have computer sensors that tell you when you need new tires, an oil change, or major service. Ultimately, however, when that light comes on a driver will eventually want to talk over the vehicle’s needs with a mechanic. This process helps to lower costs and allowed the owner to monitor their car’s health, but the mechanic is the one who can fix it, as well as diagnose other issues.
At My Financial Coach, we are looking to empower both the traditional wealth manager and the Robo-Advisor model. We believe that comprehensive and unbiased financial planning does not have to be a luxury affordable only for the select few ultra-affluent, nor does it need to be a costly or burdensome experience. My Financial Coach allows you to organize all of your financial documents in one place with a user-friendly website that is your portal to monitor and keep track of your progress. This progress is also monitored by your personal financial coach who you can speak with on the most important and personal things that come up along the way. So join the revolution, and make My Financial Coach a part of your future so that you too can take control of your finances
Andrew J. Crosby, CFP®, ChFC®, RICP®
Lead Financial Coach