Forgive me for being in a grouchy mood, but it’s St. Patrick’s Day and I’m in the office closing a big issue. March 17 is usually one of my favorite days, partly because it might as well be the first day of spring. This year, nobody would be surprised to see a blizzard in April.

If that were all that was out of place, it would be tolerable. Unfortunately, it’s the day after a thug rigged a phony secession election in Crimea and the Dow Jones Industrial Average is up almost 200 points. The fact that the Russian stock market is down 15% over the last month hardly represents equal justice.

Things also seem a little out of place when most big companies are only starting to gain the confidence to spend cash on capital expenditures and acquisitions while an upstart like Facebook shells out $19 billion for a company with 55 employees. But welcome to the new economy. Blockbuster had 60,000 employees at its peak while Netflix today has 2,000. The picture is changing.

Reading senior editor Eric Rasmussen’s cover story on page 98 about the rise of the virtual advisor at firms like Personal Capital and Betterment, to name a few, I couldn’t help but question whether a new business model for the same service, personal financial advice, will translate into the same dramatic type of headcount reductions we are witnessing in other businesses. The guess here is it won’t.

There is no question that virtual financial advisors can create certain efficiencies and slash the amount of face time a Millennial spends with an advisor. From what I’ve seen, many of these folks prefer to spend much of their time with best friends Skyping, texting and whatever, dude. Next Generation financial advisors already are communicating with clients through these new media vehicles.

Personal Capital’s CEO Bill Harris undoubtedly is correct when he argues that there are some financial advisors who stress the comprehensive financial planning services they offer even as the true measure of their value proposition tilts heavily toward asset management. Moreover, Personal Capital’s fees  are in line with those of many advisors and higher than those of leading discount brokerages, so at this point the company isn’t competing on price like some other virtual advisors.

My question is whether virtual advisors can deliver personalized financial life planning services without face-to-face engagement with the client. I tend to think not. This simply is not an easy business to scale, and while new innovators will find ways to deliver services more efficiently, I’ll be surprised if this business witnesses the kind of headcount reduction downshift that the transition from Blockbuster to Netflix did. I won’t be surprised if some of the new virtual advisor platforms prove to be a great answer for smaller, younger investors ignored by the mainstream financial services industry.

Evan Simonoff, Editor-in-Chief
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