A/B Conversations: CFP® Your Way Out Of It

Ep #133 - Back to the Future: How Our Bold Predictions for the Financial Advising Industry Held Up

• Benjamin Haas I Haas Financial Group

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Adam and Ben made five “bold” predictions on the future of the advising industry back in Episode 43. Four years later, it turns out those predictions were not so bold! Listen in as they reflect on what has changed and is continuing to change for the consumer, how the importance of CFP designation and behavioral finance continue to grow, the state of advisor commissions and the role of technology in client relationships. There’s a smattering of data and some discussion on industry trends, all wrapped up with a bit of bias for the client-first, fee-only advising relationship found at Haas Financial Group.


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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.

[00:00:00] Adam Werner: Hi everyone, and welcome to AB 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.

[00:00:28] Ben Haas: Hi, Adam.

[00:00:28] Adam Werner: Hey there, Ben.

[00:00:30] Ben Haas: Happy Podcast Day. How are you here?

[00:00:32] Adam Werner: I'm great. How are you?

[00:00:34] Ben Haas: Excellent. I usually say that excellent. Even when I don't mean it. I like to present a lot of energy to this podcast, and yes, I am therefore excellent.

[00:00:43] Adam Werner: And the upside of that is if you are so consistent with your messaging, I'm not gonna know if you're lying or not.

I'm gonna assume that you're not gonna feel excellent every single time you say it. But fake it till you make it put on a happy face. That's, and we'll get through it.

[00:01:00] Ben Haas: I tell you what, if I can use your words then consistent messaging. I'll use that as a segue. This is going to be titled, and I know we've done this in other podcasts, we've reviewed what we've said in the past just to make sure that we feel the same way and can communicate that to clients.

We did a podcast, if you remember it was number 43. This is shortly after Covid that we started this podcast. And we kind of put our stake in the ground and said, here are five bold predictions for what we think the future of advising is going to look like. And I don't know about you, but I'm kind of shocked we're still here five years later recording a podcast, but because we are, we kind of have to hold ourselves accountable and say where we were.

[00:01:41] Adam Werner: Yeah.

[00:01:42] Ben Haas: Were we wrong, to what degree? And it has to all be within this lens of we want to give valuable information to our clients, potential clients and other advisors that might be listening.

So yeah. Let's review what we said five years ago.

[00:01:58] Adam Werner: Yeah. Yeah. I, yeah, I think it's a fun exercise and in prep for this revisit of podcast episode 43, just seeing some of those predictions, I felt good. With them now, seeing them four years later or so. So that, I think that was good.

I don't think we wildly, you know, changed our minds on any, or were wildly wrong. I think maybe it's taken a little bit longer for some of these, but we'll kind of dive in. So the first one was just the ratio of financial advisors to certified financial planners, right. The highest designation in our industry for financial planners.

So, it's still, that hasn't shifted a whole heck of a lot. There are 283,000 advisors, give or take in our country, and about 103,000 of those 283,000 are certified financial planners. So in my mind, that's a lot of CFPs, which is great. From when we recorded back in 2021, that's really, it's really only grown that ratio by 3%.

There's only 3% more CFPs to advisors than there was three and a half, four years ago, which doesn't feel like a, huge shift, which is what we were predicting, right? A bigger flip that there's gonna be way more CFPs than non CFPs.

[00:03:23] Ben Haas: Right. So from that standpoint, we probably didn't hit the mark on that, but let's just dig a little deeper there, because I think these are two important anecdotal points that we can make here.

The growth though of younger CFPs is certainly there. In fact, last year, 57% of new certificates were actually under the age of 35. Mm-hmm. So in a, mm-hmm. in an industry where advising really does look very white hair. We have definitely seen those demographics shift, and I would take this one step further not to focus on CFP, but I saw a great stat.

Now this is going back, you know, probably close to 15 years ago, but the CFP board has put a lot of effort into increasing awareness for the designation, and that now, the awareness is that like 90% of consumers are aware of it, and frankly the stat I do love to show is that since 2011, the preference for CFP has grown from 22% to now 89% since 2024.

Yeah. So if the theme of us talking about, you know, the ratio of CFP to financial advisor, it hasn't changed, but the consumer preference appears to clearly be changing.

[00:04:35] Adam Werner: Yeah, which I wanna, I want to take that and pivot to maybe our second prediction. 'cause I think that those two themes I think are linked.

So our second prediction was commission based business models will hopefully die out. And I think that is further reinforced by those trends of consumers wanting to work with CFPs. Right? And hopefully not in that commission based kind of product world really. Let's pay fees for service and advice.

Right? And even just that, you know, more than half of new CFP certificates are under the age of 35, I think is, kind of furthering that point, right? For young people wanting to be in this industry. There is still sales that go along with it, but it should be more of the focus on advice holistically, which again, it's kind of reinforced by more of these younger planners, focusing on the designation, doing the right things by seeing somebody's whole picture and giving true advice, rather than just, you know, selling an investment, selling an insurance product or something of the light.

[00:05:42] Ben Haas: And clearly, you know, in fair disclosure, certainly our clients would know this, but to anybody else listening, we have a bias here. We don't have securities licenses anymore because we did not want to be, we don't want to confuse anybody that's coming to us with how we get paid. Right? We only get paid to give advice.

There's still, I would say there still is a place for commission-based business but I, what I think is actually shifting is that the awareness and therefore somebody saying, I have a preference in this space. Right? It's for an insurance product, for an annuity, for something that's gonna provide them with what they want, you know, safety, security guarantees, whatever that would be.

Mm-hmm. I think the awareness is there. So what has changed is maybe the consumer of the past being unaware of how they were paying or uninformed of what the relationship was. I believe we are trending in that direction, which is why you probably made a good point. Prediction number one, and prediction number two really are somewhat linked, I think.

[00:06:44] Adam Werner: Yeah, and I think our hope is for the consumer here, the client side of things is that there's at least just transparency on how you are engaging with an advisor. Just to be able to make a conscious decision. To your point if somebody wants to purchase an annuity because they like the safety and security of those guarantees that may come along with that, understand that person is being incentivized or compensated by selling you that annuity product.

They may not be...

[00:07:13] Ben Haas: But if that's what you want, then...

[00:07:14] Adam Werner: Right, right.

[00:07:15] Ben Haas: To each their own.

[00:07:16] Adam Werner: Yep. You need some milk, go to the grocery store, buy some milk. Somebody's making money along the way. That's fine. As long as you're not thinking you're getting advice on the type of milk to buy and get, and paying somebody for that specific advice.

So, so yes, I think that's very fair. In this instance.

[00:07:33] Ben Haas: Yeah. And just support that concept with a little bit more stats. The right in, I'm tr I'm struggling here because I want to give them the acronym, like the RIA. Yeah. IAR, 

Adam Werner: Investment advisor representative.

Right. So those, right, those that don't have their securities license anymore, like us. Right. Those that no longer have that affiliation. Those numbers.

[00:07:57] Adam Werner: Yeah. Fee.

[00:07:58] Ben Haas: Go ahead. Yeah.

[00:07:59] Adam Werner: Fee only, let's say. People that don't have a license to sell commissionable products, to sell commissionable investments.

[00:08:08] Ben Haas: Those numbers, you know, there was around 70, from what I just looked up today, there was around 70,000 in 2021 when we recorded this last.

[00:08:16] Adam Werner: Yeah.

[00:08:17] Ben Haas: I don't know what the numbers were for 2024, but at the end of 2023, it was closer to 90,000.

Right. We're looking at a 20, 25% increase in those that said, I don't want this license anymore because I want to be fee only. Clear. Clearly those numbers are showing me that we thought this was coming and it is happening.

[00:08:35] Adam Werner: Yeah. Yes. Which again, I think that makes sense from the consumer side. I interesting thought. Like, I, I wonder which one, I, am I Right. I wonder which one drives this forward the most? Is it the advising side, thinking ahead of here's what we think consumers want, or is it truly the consumer saying, we don't wanna be sold things, we just want advice. And that's what's forcing the advising world to kind of adapt in this way?

I don't know which, which comes first, the chicken or the egg in this situation. But the fact that it is moving that direction is all that truly matters in our minds.

[00:09:12] Ben Haas: Yeah, and I would be willing to bet that it's more supply than demand. Right. That just think of our own experience, right?

Little Kutztown, Pennsylvania people call, you know, it's not every day that there's a new prospect, you know, calling in, wanting to work with us, but we get plenty of it. And it's more often today, certainly than it was five years ago, that the consumer is asking the question, are you a fiduciary?

Right. Yeah. Something of that nature. So I, I think just in our own world that's happening.

[00:09:40] Adam Werner: Yeah, for sure. So. I was gonna go to number three, that financial planning firms. The prediction was that financial planning firms will expand into more of a one stop shop for financial advice, tax advice, estate planning advice, kind of the idea of more of a one stop.

This is the office I go to and I'm getting all of these different pieces of my financial life handled by different professionals.

[00:10:12] Ben Haas: Is it happening? I don't know. I think, you know, the study on a smaller scale. Yeah. Yeah. The studies that I read, and again, anecdotally you know, we started working with somebody last year who said, you know, the estate attorney that's settling her mom's estate also gives investment advice. You know, we've, long known advisors out there who also do taxes. So I think that's probably why we said it, that whole idea, you know, family office, everything in one spot. I believe there's an appetite with our own clients, you know, that ask, Hey can't you just do my taxes?

Like, why do I gotta keep in the middle here? I just don't know that there are clear statistics out there that kind of prove that this is growing. Yeah. At least I haven't seen them.

[00:10:55] Adam Werner: Yeah, and I think just in this industry in general, that those bigger, like they, they do call 'em like a family office that is, that does really cover everything and keeps a lot of that in-house.

The financial advising industry as a whole is certainly more focused on the higher net worth where you can pay, or somebody has the resources to pay for those broader services right under one umbrella, and you're paying for that convenience. I think it's, harder to scale that at a lower level.

That's why I think it's just a slower progression. But there's certainly a ton of benefit to keep things in one spot. To your point, it's if you're working with a group that you trust, for advice to be able to get your taxes done, there just it's peace of mind, right?

[00:11:44] Ben Haas: Yeah.

[00:11:45] Adam Werner: And continuity for advice too. So yeah, I think that is still trending, that will become more and more ubiquitous. But I don't think that is a short-term thing. I think that is more of just a longer term trend that will just take time.

[00:12:00] Ben Haas: Yeah. I think you said that very well because it is, you have to be able to do that on a more local smaller scale.

[00:12:07] Adam Werner: Yeah.

[00:12:07] Ben Haas: I think is what we're talking about here because again, free and fair disclosure, it's not like we haven't considered doing it, but we'd be doing it as an added convenience and service, not necessarily because it's a profit margin for a more traditional 1099 relationship with certain clients. Certainly even on the estate side. I don't wanna confuse the matter here. One stop shop to us, we're talking about the implementation of the advice. We are to give proactive tax planning advice. We are to give, our opinions on beneficiary designations and you know, how wills and living wills really should be documented.

It's taking it to the next level where we give the advice to the client. Now, certainly in our world, we want to be accountable to the implementation of that advice. All the better for the client. If we can go look, if we're all in agreement here, we can just take care of it. It's not usually the case with a traditional financial planning firm because there'd have to be a referral out or there'd have to be a partnership with a tax attorney or an estate attorney.

[00:13:11] Adam Werner: Yep, yep, exactly. All right, so bold prediction number four, which is, was funny for me to revisit. So I'll say what the prediction is and then maybe I'll give my little 2 cents. So the prediction was that technology and RoboAdvisor platforms will augment, not replace human financial advisors. Which when I read that, I was trying to think back to where we were, you know, four years ago or so, when that robo-advising kind of fervor was really rampant and it was technology is going to automate the investment process for a lot of investors. You don't need to go to a financial advisor to get asset allocation investment advice. I don't necessarily disagree with. But what, what really came out of that, these last couple of years was just, I think it really showed how commoditized the investments truly are. And that's great to, if you want to use an online platform, right? Help with the asset allocation, help with, you know, figuring out to what degree you should be taking risk in your different accounts. But beyond that, there's still the rest of your financial life.

There's still planning that needs to happen and that technology has not yet solved, and I don't really see that anytime soon because the human element is still so important.

[00:14:37] Ben Haas: Yeah. And this is maybe where bold prediction number four will match or carry over into bold prediction number five, like one and two when together.

Yeah. Yeah. I think the beauty of financial planning to me is that there's so many different ways to go about it and the solutions, or maybe I should say the strategies definitely are different depending on like where you are at in life, what you value. The robo platform makes sense to me, and we saw big growth in that.

You know, leading up to 2021, the stats have shown that has teetered off in a major way, and maybe that's because of what we'll talk about in bold prediction number five, but, what, where it does really fit and where I think it should probably continue to be a, an asset, you know, for the industry.

It's with the younger consumer. Sure. It's with those portfolios that does, it really does the service and the advice, does it really make sense to pay 1%, you know, north of 1% to have that advisor when you're 35 years old? And really what you should be doing is just saving, saving, saving anyway. Yeah, RoboAdvisor fits really well there.

I believe the average portfolio size in a robo platforms around 60,000. Right. So, okay. That speaks to where it's being used and I think it matches where we think it should be used. Yeah. But I don't think I would still say that's not going to replace the advisor who is there for people who go, I don't know how to handle this retirement thing. I don't know how to make these bigger irrevocable decisions. Yeah. I don't know how pulling this one lever is gonna affect this other lever. Like that's why we have a job.

[00:16:11] Adam Werner: Yeah. And I mean, I certainly did not predict, we did not predict the proliferation of artificial intelligence over the last year and a half or two years, which that certainly has some potential in the future to maybe take some of more of like the human reasoning side of that, right? Maybe. Maybe there is more potential for advice, but still you are trusting your financial future with an output from a machine.

And that in different circumstances that may be fine. Humans are flawed, right? We're not all perfect. But that said, the ability, I think that just further drives home the point for me that the more technology, the more AI becomes relevant in today's, you know, industry. This day and age. It's more there I think to augment what is already happening. Maybe create some efficiencies, maybe further some effectiveness of advice. Yeah. More so than replace the advisors as a whole.

[00:17:17] Ben Haas: So permission to move into point number five here, where we said the prediction was that there would be an increased focus on behavioral finance. We call it the human element.

And I believe we can tie these two things together. Sure. We can plug something into Chat GPT to Google and say what, what's the output that we want here? What are, what's the answer to the question? But there still is this huge gap between knowing what to do and getting it done. The implementation of advice.

And for a lot of people, you know, in between that gap of I know what I should do and getting it done is also maybe a lot of anxiety, a lot of confusion, a lot of second guessing, where sometimes it's as simple as. I still need a professional to look at this and tell me that I'm gonna be okay if I do this, or to be a thought partner with me and answer my, or think through with me my what if questions.

And that's what I think technology's great, but this human element of what people require from us and need, need us to do, it's still a service-based industry after it's an advice-based industry.

[00:18:25] Adam Werner: Yeah. And even something as simple, and I love that you used that, that term, like those what if scenarios? Just something as simple as that, there, there can be the black and white that says if I want to retire at age 62 and I want to live off a hundred thousand dollars of income, you can do a quick calculation, right?

To determine what do I need to save to get there. You're making a lot of assumptions built into that. That's all well and good, right? You can mathematize is that even a word? Yeah. I love it. You can turn some of these questions into math equations, but what that doesn't factor in is the human element. Right.

Great. You're telling me I need to invest in this, this is a theoretical, right? This computer model is telling me I need to invest in this certain way to reach my goal. How? But what if I can't? Yeah. What if I, well num number one, not even the how, but what if I can't emotionally deal with a market downturn with that level of risk to get to my goal, and now I jump out of the lifeboat when I shouldn't have even been in the storm to begin with.

And that's where. Right. The optimum outcome when it comes to strategy or just direction with planning needs to factor in the person, the situation to not necessarily come up with the exact picture, perfect strategy or advice. It's really what's the next best step for this person to take that they can take, right?

The implementation of that action is of primary importance in when it comes to the strategy.

[00:20:02] Ben Haas: Well, and in some cases, those shades of gray stopping the action, right? We've used the stats before, the average returns over the last 20 years, s and p, five, hundred's, like 10%, 60, 40 portfolios, six or seven. The average investors at like four, right?

And there's, just one simple explanation for that, and it's, we're human beings, right? Yeah. We could have this robo model, but if we're not feeling good about what's going on in the world, it's not hard to click that button and stop what we're doing when the human interaction that we need to have is to maybe keep them between them and pushing that panic button. Yeah. I certainly, if we were gonna make bold predictions moving forward again, I think the necessity of this human element and the consumer desire for this human element is only gonna continue to grow. Yeah. Regardless of technology, AI.

[00:20:52] Adam Werner: Yeah. And I think it, it really does put the focus and to the point where, going back to bold prediction number one with focus on CFPs in this industry.

The fact that the CFP board added the behavioral finance element to the curriculum now.

[00:21:07] Ben Haas: Yeah.

[00:21:07] Adam Werner: I think further drives home that point that our industry advisors and planners need to be much better equipped to be able to have those conversations and guide people with reality in mind and not just the, well, here's what you need to go do.

Here you go. Here's your advice. Go execute it. Good luck it. That, that works for some, but not for most.

[00:21:32] Ben Haas: And back to your question on supply versus demand, like who's really driving this? You know the answer to this, but I'm gonna ask you anyway. What's the number one skill that the consumer wants from an advisor?

It's their interpersonal skills. It's not technical knowledge. It's not their use of a calculator. Right? People are hiring us more and more because they need a partner in this process. They need somebody they can trust to filter all that information down into what's best for them. They want to have conversation.

[00:22:01] Ben Haas: They want to align their values to their wealth. I don't see that changing. I only see it growing exponentially.

[00:22:06] Adam Werner: Yeah. Yep. I agree. I agree with that one hundred percent.

[00:22:11] Ben Haas: So we weren't totally off from five years ago.

[00:22:14] Adam Werner: No, not at all.

[00:22:16] Ben Haas: Can I put you on the spot? Is there anything that we, now looking backwards, we've given our comments, is there anything that you think you would boldly say will be dramatically different five years from now?

And how advice is given or how the industry is perceived or how it's functioning?

[00:22:34] Adam Werner: Nothing obvious or nothing, I, that I can point to as like, super specific, but I just, I think the ability for technology and I'll say AI again, but really just technology as a whole to help shape the client experience for consumers to get out of the process, what they're hoping to get out of it, and to help advisors deliver on what we're hoping to help people with, right?

So, so we, you, we hopefully remove ourselves further and further from the, I'm gonna sell you this investment A you're gonna set it and forget it, and, you know, talk to you hopefully never again, and just move on to the next person. I think the idea of just being able to further that client experience with the use of technology.

Which in theory should hopefully allow advisors to work with slightly more people because there are limitations on how much an advisor can do and on a day-to-day basis, quantity wise. Our hope, or at least I guess my prediction is hopefully technology can help streamline a lot of the non client facing side of the business, but also then create a better interface for clients to engage and just have that final outcome. Just feel a little bit easier on the client that it's not as hard to work with an advisor and actually get to that end stage of implementation, taking action and just making sure there is some accountability in that process.

[00:24:09] Ben Haas: That was gonna be my last comment as a prediction that maybe we can look back on if we're gonna do this podcast for five more years. Lord, can't imagine that, but I think, you know, you and I have kind of shifted the way that we think about our business and how we define success. At a certain point in your career, it's not about the number of clients you work with.

It's not about, you know, the profitability of a business. It is the outcomes, right? The fulfillment of the client, the implementation of the advice. And I know we've used this stat before, but 70% of our clients only implement 20% of our advice. That's a low number. And through all of these things that we're talking about, making human connections with clients, using technology in a way that improves their experience and outcomes, I hope that stat, if we look back on that five years from now, that there is much better implementation from advice to getting things done that's gonna lead to just greater fulfillment on our clients' lives.

[00:25:09] Adam Werner: Yeah. Yep. Yep.

[00:25:12] Ben Haas: We'll try to do our part, try do our part right on that step.

[00:25:16] Adam Werner: Same page. Yep. Yep. We're gonna try.

[00:25:18] Ben Haas: Alright sir, you have a great rest of the day. Thanks for all you do.

[00:25:23] Adam Werner: Thank you.

[00:25:24] Ben Haas: Bye.

[00:25:24] Adam Werner: See ya.

[00:25:32] Ben Haas: Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only, and are not intended 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.

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.

Ticket #T008727

Sources

https://www.financial-planning.com/list/finra-data-provides-wealth-management-snapshot  

 

https://www.cfp.net/news/2025/01/cfp-board-marks-milestone-year-topping-100k-certificants-and-boosting-consumer-trust-and-awareness  

 

https://www.finra.org/sites/default/files/2024-07/2024-Industry-Snapshot.pdf  

 

https://www.statista.com/outlook/fmo/wealth-management/digital-investment/robo-advisors/worldwide