Alex Murguia, managing principal of McLean Asset Management and CEO and founder of inStream Solutions, believes advisors should be aware of major changes underway in the planning profession—and should take proactive steps to safeguard their practices.  Financial Planning talked to Murguia about his views on the outlook for RIA businesses.

Q: Why do you believe financial planning is at a disruptive crossroads, and what should advisors be doing about it?

A: Here’s what I mean regarding the disruptive crossroads for the planning profession. Right now, traditional, in-person financial advice is being challenged by information that’s sprouting all over the Internet. New consumer sites and robo-advisors are providing financial advice to the mass affluent. While they are not currently a direct threat, they are becoming more popular and have significant financial backing. In addition, many advisors are doing themselves a disservice by just providing “set it and forget it” model portfolios. Could you blame consumers for not fully understanding the true value of independent financial advice, in this context?

Value Proposition

Advisors need to deliver on their value proposition instead of just giving it lip service. McLean Asset Management, my firm, is not immune. Advisors, regardless of our differences, all have the same value proposition. “We help our clients achieve their objectives.” I submit as evidence all the clichéd images of sandy beaches on advisor websites.

As an industry we don’t demonstrate our value proposition.

Although advisors provide great value, if you were to ask almost any advisory firm, “how many of your clients have achieved their objectives?” I doubt that many would answer with any precision.

If you were then to ask, “How are your current clients doing relative to their objectives right now?” I also doubt any advisors would really know that answer.


I find this very troubling and unbelievable that we as an industry have not done a better job. Let’s juxtapose that with UPS.  They would be able to tell you instantly and to the foot where all their packages are.

If we can’t demonstrate our value proposition, then we have not met our value proposition.

Reactive to Proactive

If 90% of a successful advisor-client relationship is based on the actual relationship and the remainder is investment-driven, then why are 90% of the solutions put in front of advisors geared toward making trading and investment selection easier? If I can tell you that my company-wide REIT allocation is off by 10 cents, then I have no excuse for not being able to tell you that, say, 85% of my clients are on track to achieve their goals at any given point in time.

We need to change our mindset from one that looks at financial planning as an event-driven exercise to one that is able to proactively manage a financial lifecycle of decisions. Most advisors are asked the same 10 questions 50 times a year. We need to have anticipated and addressed those questions before our phones start ringing.

Ready, set, go

Our current reactive approach to planning will not get us there. We need to be able to know where we have been, where we are and where we are going with each client. If a client of 10 years walks through the door and asks, “What have you done for me?” Can you immediately tell them? If you can’t, then they will think you are just an expensive robo-advisor.

Consumer technologies can slowly chip away at us or we can demand solutions that help us proactively manage our client’s financial needs. Either way, our businesses are changing.

Also see: Asked and Answered: Keeping New Hires Happy

Danielle Reed writes for Financial Planning.





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