Where is the financial advising industry heading? In our latest episode, listen to Adam and Ben talk about what they see for the future of the industry and trends that they think will become more popular in the next 5-10 years. See if you agree!
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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
Where is the financial advising industry heading? In our latest episode, listen to Adam and Ben talk about what they see for the future of the industry and trends that they think will become more popular in the next 5-10 years. See if you agree!
Tracking # 1-05174883
Thanks for listening!
If you want to be notified when the next episode will be released, you can:
For more insights on everyday financial planning questions, go to www.haasfinancialgroup.com
Contact Us:
Email us at info@haasfinancialgroup.com
Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
Benjamin Haas 00:03
Hi everyone and welcome to A/B Conversations where we will help you CFP your way out of it. A podcast where you get into the minds of a couple Certified Financial Planners on how we think and feel about everyday financial planning questions and what should really matter most to you. A healthier financial life starts....now! Welcome back, everybody. A/B Conversations. Episode number...
Adam Werner 00:32
40 something.
Benjamin Haas 00:33
40 something. Hi Adam. Welcome to the 40 something podcast with A/B Conversations.
Adam Werner 00:41
Thanks for having me back.
Benjamin Haas 00:43
It's been like a year. We've been doing this for almost a year which is kind of crazy to think about. I hope people see us having a lot of fun doing this because it has been a lot of fun and hopefully people are learning something.
Adam Werner 00:58
Yeah, we've certainly gotten that feedback. We had maybe already said this on one of our past podcasts. He said, you guys are having way too much fun. Yeah. I said, well, we are. I'm glad to see that and I hope you get something out of it besides that.
Benjamin Haas 01:12
Yeah, it comes from a place of passion which is maybe an OK way to start today's podcast because we're going to totally self-indulge here and talk about something that isn't really specific to financial planning clients. It is more, I think, talking about our passion for the industry and where we kind of see things going. So we're going to tee this up in a way that focuses on more long term, five, maybe even 10 years from now. How do we think this industry, how do we think the art of financial planning the thing we love, how do we see it changing in a way that maybe consumers could start to recognize right now? Or maybe start to prepare them for how a relationship may change if they aren't working with somebody to see things the way that we do?
Adam Werner 02:10
I was going to say, so some of these things may have already started. They just aren't necessarily mainstream yet and I think that our hope is that a lot of these things will become more ubiquitous in the years to come. Maybe it was all my, you know, Word of the Day calendar. I completely lost my train of thought now.
Benjamin Haas 02:42
Some of these things definitely are trends and we'll kind of hit on that. I think we should probably start with something that it's the title of the podcast. We are Certified Financial Planners. I will say, I think it's highly likely that the ratio between financial advisors and Certified Financial Planners is going to flip. Today, there are about 270,000, licensed financial advisors and all that that means is they can sell you an investment. There are about 90,000 Certified Financial Planners. So, a third we'll say, I think that's awesome. I think that's great. I think if we look back just five years ago, 10 years ago, it would have been nowhere close to a third.
Adam Werner 03:28
Right. I make up one of those increases over the last five years.
Benjamin Haas 03:35
Yes. Which is a great thing.
Adam Werner 03:36
And that will continue. Yeah, I think that's one of those things that we hope becomes the standard and that is happening in other countries. I believe, like Australia and the UK are very much on that forefront of being advice first, investment second. I think slowly, the US is catching up to that trend and we pitch it all the time. Investments are merely a portion of someone's overall financial planning picture. So our hope is that that will continue and that it will be the standard that when you go to work with someone, even if you're just looking for investments, you are going to have to work with somebody who was going to want to talk about your entire picture so that the investments actually fit into everything that you're trying to do and not just the ad hoc.
Benjamin Haas 04:26
Yes, of course. You know that I couldn't agree with you more. This is something that we pound the table on not only for our own clients, why we think it's so important to be Certified Financial Planners but clearly this podcast is built on that. Let's talk about things that really matter in people's life and goal orientation. So that I think for us to boldly say, there'll be more CFPs maybe than even financial advisors is probably coming from two different camps. One, the hope is that the consumer drives that. That people truly are going to seek out that designation because they say I want somebody that has that discipline that's held to that standard that has that education. But the other way it's going to happen; regulation in our industry is going to, I think, continue to push that. It's going to say, just like it is in medicine or just like it may be in other fields that are really, truly supposed to be consumer based. It is your obligation, it's your, in our industry, it's your fiduciary standard, to get paid to give advice, not to sell investments or to sell product.
Adam Werner 05:33
I feel like it's a sad reflection on what we do, our industry. The fact that we have to say a bold prediction is in 10 years, all advisors should have to be working in your best interest is kind of ludicrous but to your point, it's the way things are set up. The changes, not only in just the way that consumers want advice but also the way the industry itself is evolving to get to this point where we believe it needs to be. It will absolutely happen. It's just a matter of how long is it going to take and we hope that it's much sooner than later.
Benjamin Haas 06:19
Yeah, and every time we have this conversation, I'm like careful to not, I certainly don't want to offend the way that things have been done. I don't want to call out anybody that does it differently than us. It is just, there are different pockets of this industry where you can go to the big wire house firms and you know you're going to get probably great investment management. But without a CFP, focus on maybe some other things. You can go to the insurance world or the mutual company world where, again, there's all great intentions there just feel sometimes like it's a captive audience or how they are compensated is through the sale of something. I just see there continuing to be a greater shift towards the way that we have a business structure in the world that we live in more of an independent space where you truly are just paid to give advice. I think the consumer base and the regulatory environment is going to push the growth in that area even more over the coming years.
Adam Werner 07:16
Yeah, so that's bold prediction number two which is that we believe the commissionable side of this business, the being compensated to sell somebody a product or for consumers to essentially pay commissions or transaction costs to get access to things - will be dead. We're hoping in 10 years that will not be an option, in 10 years that you are truly paying for advice. If you are working with a professional, if you're a do it yourselfer, your options are I'm guessing will probably look very similar to the way that they are now. But we're saying that commissionable side, really truly, always had this. I think this is the way the industry has still been approached by consumers is, what's in it for them? When we are working with an advisor, how do they get paid? If I'm not paying you directly? It's always in the back of their head of well, they're getting paid somehow but it's not transparent.
Benjamin Haas 08:16
Yeah, so I think that's the key thing. A lot of the regulations that we have to follow are always trying to make sure that somebody qualifies for something or their financial profile means that they’re, suitable. Suitability was the word I was really struggling to find there. Thank you. Regulation has gotten to that level but it hasn't really gone so far as to hold everyone in the industry to a fiduciary standard where we literally have to put ourselves in their shoes and do what's in their best interest which means how we get paid. I mean, I know we've used this analogy before, it just needs to be where every product that's out there is on the same level playing field where truly the only thing that should drive the decision-making process is what's best for them. And I do think, I don't even think it's bold, 10 years. Commission-based business will be dead. It'll be dead. If the consumer doesn't force it before then I do think regulations will get to that level.
Adam Werner 09:20
Yes. Agree.
Benjamin Haas 09:24
I'll go with a third that I think kind of does tie into that. I think as financial planning and the Certified Financial Planning profession becomes more of not just an expectation but the norm. It's probably increasingly likely that the firm that provides you with financial advice may also have the ability to branch out a little bit and do some accounting work for you. Do your tax return. They're probably partnered with a local attorney that can do some of the estate planning work. I think that one stop shop for advice is probably going to become more popular, it's probably going to continue to grow.
Adam Werner 10:04
Obviously we've talked about these in advance but yeah, I agree wholeheartedly. We certainly get those questions from clients. If they don't have a dedicated tax preparer or CPA that they really like and trust, it's, do you guys do taxes? Do you have somebody you can refer us to? When are you going to start doing them like that, just that convenience side of things. We certainly position ourselves as the epicenter of their financial life, right, trying to coordinate all these different pieces, whether they are working with professionals, we certainly can coordinate with them. But if they don't have them and I agree, it’s going this way that being able to go to one group or one business and then be able to check off all of those boxes. And by the way, it probably is going to be a much more efficient process working with one team coordinating all those things rather than I'm going to go here for piecemeal information. I'm going to go here for piecemeal information and by the way, I'll come to you for my financial planning. I'll just fill you in on what these other people have told me that. Yes, that will definitely be the case at some point.
Benjamin Haas 11:13
Yeah, and again, I think that it's really coming from three different spots in my mind. The consumer may push for it and that's probably because we see the trend that financial lives are not getting simpler. Given the complexities of what people have going on. People don't work in the same job for 30 years like they used to. Family dynamics change, relationships change. I think the complexities that would require making sure that everything is in one spot and like the left arm is talking to the right arm, we're just seeing more and more of that. So I think the consumer may push it. Again, if there is more growth in this independent advising space where people are Certified Financial Planners with a more independent structure, then they may look to see to fill that gap where the industry could approve more of that. I think, again, regulations are probably getting into a spot where this separation of all these different professionals and your ability to kind of have things in one shop. I see all three of those things coming together to make that family office feel probably more predominant 10 years from now.
Adam Werner 12:23
Yeah, so I'll throw out another one that branches off of that. You know, several years ago, the introduction of robo-advisors was very touted as, it's going to replace a lot of the advising force, right? People are just going to be able to go to a website, plug in some information, the algorithms going to spit out what they need to do and how to invest in boom, done.
Benjamin Haas 12:45
Yep, piece of cake.
Adam Werner 12:49
That's not, we certainly don't believe that robots are going to replace us from that sense because what we do from a financial planning perspective, I don't think can be replicated by a robot at this point. Maybe it's coming. I don't know, Ilan Musk, work your magic behind the scenes, get some AI to think like a CFP. Maybe that's going to happen but what I think will happen is that the technology side of things, the robo-advising components will just augment what advisors are doing. What you and I are doing to coincide with those expanded services to be able to continue to bring not only just elevated advice but elevated service and being able to branch out into more areas and still have expertise in all in all those aspects.
Benjamin Haas 13:40
So, many thoughts running through my head. The robo-platform, to me is, in a way, bringing greater accessibility to investment advice for sure. But again, what is that challenging? It's challenging this wire house feel where, hey, these advisors are the only ones that have the information that I need to make good decisions, algorithms are replacing that. That's where the robo-advisor is absolutely going to continue to grow and maybe that's what the younger generation, right, that kind of wants to kind of do it on their own but they have the support of some algorithms. Then the data crunching to support encouraging a one move versus the other but that algorithm cannot replace real life experiences. It cannot replace the complexities of just human emotions and too much stuff to digest because, a lot of what we do is an art and as much as we want to talk about it, like a science and our podcast sometimes says that this is your situation, here's the advice. Everybody's different. I think what is going to vastly change though when it comes to technology is the client experience and we've maybe talked about this as a lot of financial planning can feel like we are Oz behind the curtain. We're taking all this information and whether it's statistics or it's understanding the emotions of somebody. What is our job? It's to put the puzzle together but I think technology has put us in a spot where that relationship really can be interactive. People can see cause and effect have certain things that they are doing. People can be educated through technology on, what are some of the things that we're paying attention to, so that the whole client experience does feel like it's at their fingertips or it's supported in the office. It's not just us saying, hey, you know what, trust us. Yeah, we did the work trust us.
Adam Werner 15:41
Yeah. I mean, we certainly treat our process very interactively and yes, our prediction is that will continue to become the norm and that it is more transparent. Like you said, it's not Oz behind the curtain. Trust us, we know we're doing go execute these things that it is much more working in concert than it is an advisor dictating here's your to do list. Go do it and let me know when you're done.
Benjamin Haas 16:08
Yeah, I think I liken that to like, at this point, if you really want to, you can log on to your medical provider's website and there's your medical file. In the same way, they have to take notes on why certain things were prescribed and what's going to happen next and here’s the medications and all of that. At this point, all the regulations in our industry are certainly they're getting there. I think if your true financial plan and you're doing it already, documenting your advice and why. I just think technology is going to bring that even more to the forefront where it becomes easier for the adviser to do that and the consumers should expect that they are able to see and to whatever degree they want to be educated, know why we're talking about the things that we're talking about. It's not just, you know, you're at a cocktail party. Hey, what does your advisor do for you? I don't, I don't know that I get a statement. I think that's going to become far less likely 10 years from now.
Adam Werner 17:10
Yeah, so even part of that conversation kind of leads us to I think our last prediction which is the increased focus on the human element. The behavioral finance side of financial planning and advice. Just taking in, you said it earlier, like real life experiences can't be replaced by advice from a robot and we certainly believe that, even from the advisor base, that is still a very small, small component or at least that doesn't seem like it's a very wide spread component or a piece of what we do. That will continue to grow over time.
Benjamin Haas 17:58
Yeah, so this one is probably the hardest one to like, say boldly, 10 years from now, you should expect your financial professional to talk about behavioral finance. Just because I think we have a lot of, I guess I'll just use the words, I think we have a lot of dinosaurs in this industry that are not going to evolve and a lot of the ways that we just discussed, this one is probably the hardest one to evolve on because, think about a lot of the people that we work with. I think we are very blessed to now have deep relationships where maybe you've gone beyond just talking finances but you understand the family, you understand dynamics. But we know that talking about money is not something that's comfortable for a lot of people and then talking about their emotions around it, some of their biases or some of the deep personal things going on in their life. These are not comfortable things to talk about. So not only is it maybe the consumer base is going to have to get more used to being willing to have those conversations because they see that it can only benefit the relationship by giving us more information to help them. But having advisors comfortable taking that education, learning to be better communicating it, issue recognition on this, that's not number crunching. It's just a whole different discipline. I certainly hope and we promise to be at the forefront of this, like I certainly hope it grows.
Adam Werner 19:33
Yes, agreed. 100%. Moving on.
Benjamin Haas 19:38
Look, well, no, I'll stay on this. I do. I do think we're seeing it in the world. You know, I think it's becoming a little bit more. Okay, maybe, you know, the pandemic did a lot of horrible things to emotions and behavior and my gosh, you know, here we are with world class Olympic athletes that are rightly so, okay, going, I don't know if I can do this. I think people speaking out about it does give hopefully the you's and me’s of the world the permission to go, you know what, I don't know how I feel about retiring. I don't know how I'm going to adjust to losing a spouse. I don't know how this is going to go losing a job. These are things that are going to be huge inputs into how they make huge financial decisions and it should be okay for us to talk about that.
Adam Werner 20:31
I mean, often, I think in the past, right, it's the evolution of our profession. In the past, where it used to be, you had to come to an advisor just to get access to the investments. And then the CFP program was created and now it was, okay, we're going to give you some advice among many different areas. I think that continued evolution of just the role that financial planners can play and you touched on it. Those big life transitions or just the things that happen that are often negative. The reality is, you know, part of our job is, is to be a number cruncher behind the scenes but then it's also, I don't want to say playing therapists but it really is trying to understand where somebody is coming from and then being able to pair whatever we think the right advices wearing those things together and being able to communicate that in a way that doesn't just fall on deaf ears. That is the art that is way separated from the science.
Benjamin Haas 21:39
And the CFP board. I mean, they took a huge step. Yeah, announcing that starting next March, Psychology of Finances is now going to be one of their principle knowledge topics. It's coming and I think that's why we say it's, you know, it's not too bold to say, 10 years from now we'll make progress here. But I think it really does also come back to this profession needs to continue to be more about depth of relationship, depth of communication, and truly giving personal advice. A lot of that is going to be that calculator there on my desk is not going to be able to do that, it's not going to be important. I think we'll get there and I hope again, that people feel okay starting those conversations if they see it. Because here's the way I view it to other advisors that may listen to this podcast. You can ignore it and just say, trust me, I know what I'm doing. I've had all this history. I've been through this before, just do this and you're really not helping that person feel any better about what's going. You can say because you have biases, because you're emotionally not aligned with the way that I would think about things, hit the road. That's not helping them either. Yeah, or you can get a little education, you can be trained a little bit, you can change the way that you view this topic, behavioral finance, the Psychology of Finance, and be doing a better service to your clients. I think that does tie into if the CFP designation is moving that direction and therefore, those 90,000 advisors are moving that direction and future CFPs are moving that direction, then I think the consumer base is going to see that, Oh this is something I can open up again about. This is important to share. That in itself, my move this whole prediction forward.
Adam Werner 23:38
Hopefully, 10 years is on the long end.
Benjamin Haas 23:42
Yeah, we'll see.
Adam Werner 23:43
Let's hope we can revisit these topics in less than five years and say, hey, great news we were right and not well, we were way off. We're idiots.
Benjamin Haas 23:55
Yeah, well, I hope the theme in all of those predictions is better service, better advice to all the clients that are out there that deserve to have great financial advising relationships. And for those that we serve, we hope that's the case already. We'll commit to getting better but I hope that's the major takeaway. That all these things truly move the profession forward for the good of the consumer.
Adam Werner 24:20
Yeah. Well, said.
Benjamin Haas 24:23
All right.
Adam Werner 24:24
Okay, we did it.
Benjamin Haas 24:26
Thanks, man.
Adam Werner 24:28
Five predictions.
Benjamin Haas 24:30
I think it was six. Thanks, Adam.
Adam Werner 24:36
Alright. See you next time.
Benjamin Haas 24:53
Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we've voiced in this show are for general information only and are not in trouble to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you, consult with your attorney, your accountant, and financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!