Financial advice must stop being boring

Ok, first and foremost, I love the financial advisory business.  I don’t think it is boring at all.  The opportunity to increase the confidence of millions of families as they pursue the successful funding of each of their family obligations (retirement, college tuition, weddings, their mortgage, etc.)  is always an inspirational ambition of mine.  If you are an advisor, I hope you share this motivation.  I will roll out my reasoning for the abrasive title of this article and I hope you will check in on your experiences over the years as well.

In the 1980’s there were no financial advisors.  There were insurance agents and stockbrokers.  Insurance agents sold policies that accumulated cash value conservatively over many years (as well as providing death benefit proceeds in case of an untimely death).  Stockbrokers sold stocks through their “storyselling” and assisted their clients in an attempt to do better than the broad market.

In the 1990s there was a huge focus on converting the old school defined benefit pensions into defined contribution plans (401k plans).  These cases were supposed to lead to a lot of cross-selling opportunities, but few salespeople were able to successfully implement that strategy.

The dot com crash of the early 2000s led to the introduction of liquid alternatives.  It was largely due to the success of the Yale endowment, managed by David Swensen, that these liquid alternatives were made available.  However, the liquidity “premium” at the time was so large that it was impossible to replicate the results of an endowment like Yale’s. 

In the 20teens there was a large migration of financial advisors to the financial planning value proposition.  Companies like eMoney and MoneyGuidePro cleaned up as advisors used their software to create 50-200 page documents that were comprehensive to the point of replicating sleeping pills.  If you are an advisor who has experience with these large documents, ask yourself what percentage of those hefty documents collect dust on the floor of someone’s home office.  How many times did you watch the following scenario play out?

Either you, or your paraplanner spent 10-14 hours collecting information, entering data into the software, going back to clarify answers to discovery questions, customizing the document, and presenting the output in a comprehensive way only to have the husband and wife raise their overwhelmed faces from their hands and say, “So what do expect us to do now?”

Many advisors I speak to will answer, “Almost 100% of these folks behaved exactly that way.”

In 2019 I launched a company called Real Intelligence LLC.  It was created to solve this problem.  It included a modified financial planning method that was purpose-based, rather than net-worth based, it was really fast (visualize your financial future in ten minutes or less), and dynamic (instead of a document collecting dust on the floor it was a mobile app that allowed anyone to explore thousands of what if’s? on demand).  That app is still available on the Apple app store and is called “Dynamic Map.” The math outcomes are displayed in a visual way to entertain the viewer and is free.  To learn how to strategically attack challenges with this very simple looking tool, a premium version opens six scenarios that deal with real life events (divorce, getting sick or injured, inheritance, exercising stock options, etc.) and is available for just $2.99 per month.  The pandemic was a huge obstacle to our growth and I have shut the doors on that company.  The point is, with the addition of this tool and other software programs that also help deliver outcomes in about ten minutes, the value proposition of an advisor needs to change yet again.

Solving the needs of families who invest (or even business owners who invest) in a way that is inclusive of the legal, property and casualty insurance, and accounting communities will be the next value proposition of innovative and forward thinking advisors.  How can an advisor increase the confidence of retirees who are concerned about longevity risk or the impact of inflation over three decades of withdrawals from their nest egg?  How can ultra-high net worth families build a family foundation that benefits multiple charities while delivering income and tax benefits to the grantors?  How can taxes be significantly reduced for startups in the tech or manufacturing industries?  These are the types of conversations that will be gripping and incredibly meaningful to families across the country.  This business model (which has been embraced by a select group of advisors already) will increase the valuation of the practice, their assets under management to a significant degree, and open the floodgates to incredible referrals.

Although my efforts to grow Real Intelligence and the Dynamic Map mobile app have stopped, my desire to create truly incredible client experiences continues.  For advisors who have read this far, I sincerely hope your motivation is the same.  Should there be a desire to discuss an innovative business model for your RIA or broker/dealer, I welcome those conversations and stand ready to embrace a strategic partnership.

I can be reached at jeffmount6@gmail.com.

#RIA #brokerdealer Holt Fogarty Harley Nager, CFP® Mindy Diamond Raymond Gettins Shannon Spotswood Jean Fidone-Schroer, CIMA®, AIF® Stacy Havener Julina L. Ogilvie, CIMA®, CPWA®, CEPA® Phill Rogerson, CFA Frank Byrd Matt Rossiter Adam D. Seiden, CLU, CLF Fred Brink, CFA, CFP® Erik Hardin Tom W McCarthy