Client spending and its impact on retirement needs to be a renewed focus of financial advisors, Morgan Stanley Wealth Management Investment Solutions Head Ben Huneke said Friday.
Spending can have a greater impact on retirement security and other financial goals than investment returns, he said.
If a client should be spending $25,000 a month, but is spending closer to $35,000, an advisor needs to make that a serious element of conversations with the customer, Huneke said during a seminar at the Investment Company Institute annual conference in Washington, D.C.
One of the hot-button issues at the event was the movement of robo-advice into an industry that has prided and promoted itself for the personal hands-on relationship its advisors have with clients.
Eli Broverman, the cofounder of Betterment, the poster child for the robo revolution, bragged that it is inevitable a robotized advisor will become the leader in investing that Amazon has become to retailing.
But even he said there is a need for a human touch.
“I have never thought robo vs. human. [What I have thought] is what can software do great, what can humans do great,” said Broverman.
What software can do great is cut costs for firms, which makes it imperative for advisors to prove to clients they can add value by helping them through complicated investment decisions, such as whether to buy a second home or how to allocate their inheritance among children, said Huneke.
On the issue of robo versus human, J.P. Morgan U.S. Private Bank CEO Kelley Coffee said firms need a combination of both.
“Human relationship coupled with technology is incredibly important. You have to marry those two. The firm that does in the long term is the winner,” she said.