Imagine the feelings that horse traders had 110 years ago upon hearing about the “horseless” carriage. Their sentiments had to range from incredulity (“How can you pull a carriage without a horse?”) to cynicism (“Who’s going to take a chance on this unproven contraption?”) to utter disdain, ebbing into panic as they saw their once “established” trade go by the wayside.

Imagine further the horse traders’ agitation and confusion as the new technology measured its capacity and effectiveness in terms of horsepower—and yet, no horses were involved. (“How can a mechanical motor the size of a big dog have the propelling power of 100 horses?”) I need not elaborate any further; we all know what happened. Smug in their role of providing a commodity (the horse), they failed to realize that customers were more interested in progress itself than the means by which that progress appeared.

People will do what they must to expedite progress in their lives.

Presently we are in the labor pangs of a similar revolution in the advice business, but this one is going in a reverse direction—away from technologically driven results to the more organic version of progress. We are entering an age of advice where the chief algorithm is emotion-driven.

This phenomenon has been building for some time on the periphery of the financial services industry. Back in 2001, I first introduced the term “financial life planning” in my book Your Clients for Life. I had reservations about the public coming to financial advice offices for “life planning” services—they are coming for financial advice. Adding the term “financial” to “life planning” has in fact made it more palatable, but I must admit that after almost two decades of effort from me and a few others, the concept abides largely on the periphery of the profession with dabblers of varying degrees sprinkled in every corner.

This slow transmutation is about to accelerate in a big way. What was on the periphery is moving toward the center, and what was in the center is being pushed irrevocably to the perimeter. Investments and investment guidance have been the nucleus of the business since inception. The center is now in flux. I would describe the arc of the business as moving From the Boiler Room to the Living Room—the title of my book describing the change that must take place before this profession can realize its potential.

This realm was founded by investment managers who simply wanted to peddle their products. The business was then re-engineered by advice and planning processes that put the investment products themselves in a secondary or tertiary position in importance. We are now in the throes of the final stage of evolution for the industry—life-centered planning—where the context of how the money will be used in the life of the client can no longer be ignored or quarantined as a “soft-side” issue. Up until this point, the question driving the advice industry has been, “Do you have enough money?” This will now be the secondary question. The primary one will be, “Are you managing your money in a way that improves your life?”

To properly help clients answer this question requires a different skill set than what was required in the past. Just being a capitalist and a student of markets was enough then. Succeeding in the next chapter means being both a service-minded professional and a student of financial behavior. Scripts for selling are being replaced by candid truth-telling. Relative investment performance reviews are being replaced by financial accountability dialogues. The future, I must add here, looks very good for more women joining this profession. If being genuinely interested in others’ stories and building authentic relationships is important, then the future is yours—and it will be far more welcoming for those who have a bigger heart for service than they do an ego for selling.

Allow me to present two very promising examples of this move toward life-centered planning. Recently, I had the honor of speaking at both the XY Planning Network conference in Dallas and the BACK2Y conference in Birmingham, England. Both conferences had approximately 500 people in attendance. The XY group (named for its focus on younger generations) was founded by Michael Kitces and Alan Moore four years ago and has grown at such an accelerated pace that it even caught the founders off guard. At this conference, I met young and middle-aged planners alike sharing some destiny denominators: a focus on serving, not selling; compensation for advice, not products; and a desire to learn how to be better financial coaches.

First « 1 2 » Next