Rip Van Planner was confused. He had passed out after drinking a few too many at a broker-dealer top-sales event in November 2015, and he woke up on the sunny Hawaiian hillside near his hotel room in December 2022.
On the flight back to his office, with President Trump’s press conference streaming on the computer monitor, he called his partner.
“Where the hell have you been?” the partner demanded.
“It’s a long story. But look on the bright side. I’m back in time to help out with the quarterly reports.”
There was a long silence. “Um, we don’t do those anymore,” his partner said.
“You’re kidding! Hasn’t anybody complained?”
“Clients go to our website, scan their eyeball and check all their account information, including performance against their goals — all updated in real time,” his partner said.
“Well, if I know my clients, they’re going to want to see an updated financial plan. Did you read about this latest derivatives scandal on Wall Street? The markets are down 25%, and they’re talking about raising taxes to pay for another bailout.”
“Our website also gives real-time updates to the current funding ratio of each client’s goals,” his partner responded. “When the markets go down, all they have to do is check the portal to see if they’re still in the green.”
“Sounds like we’ve automated ourselves out of a job,” grumbled Rip Van Planner. “Maybe it’s better, since variable annuity sales are probably falling through the floor and AUM revenues are tanking. Have you laid anybody off?” he queried.
“We don’t charge that way anymore.”
“What do you mean?”
“We don’t take commissions and ... ”
Rip Van Planner rose up in his seat with visible anger. “Are you telling me you’ve become one of those fee-only fanatics?”
“We joined the Professional Association last year, which lists advisors who meet real professional criteria. Only a year into its inception and all the business is already moving in their direction. Why would anybody risk working with a salesman when you can just go down the PA list and find somebody who doesn’t have an agenda?”
“Agenda?” Rip Van Planner snorted. “I never sold anything I didn’t put my own money in.”
“Me, too.” There was a sigh on the other end of the line. “In any case, one of the requirements was that we give up commission revenue, which was fine with me. Ever since that rogue insurance guy started publishing mathematical models of variable annuities, it’s been hard to persuade people to pay us to sell them products that cost more and deliver less.”
“And we’re not selling non-traded REITs either?”
“Those imploded three years ago. It was a real mess. You’re lucky you weren’t around to see the lawsuits.”
“So I guess we’re just making a percentage of assets these days?”
“It’s all retainers. Either billed out of the portfolio or, for younger clients, out of their bank account, like a monthly phone bill. “
“Retainers aren’t going to work,” Rip Van Planner said doggedly. “People won’t pay for financial planning.”
“That’s the funny thing. Turns out they won’t pay for a simple mathematical analysis that anybody could do on a spreadsheet. But they will pay somebody to be their professional thinking partner when they finally get serious about planning out their lives.”
“I’m pretty sure I don’t follow you.”
“We prepare plans with our clients during several meetings, where they have a chance to really think about what they want to do with their lives and what it will take to take to get there. And they enjoy it! Who doesn’t like to have somebody focus on them and their goals, and tell them with authority that things they’d given up on are actually possible?”
“Sounds kind of frou-frou to me,” Rip Van Planner grumbled. “What did you say about goals? You mean the portfolio?”
“The portfolio is such a small part of it these days,” his partner responded. “Our performance statements list all the personal and professional goals clients achieved this year and since inception. People can see how far they’ve progressed in their lives after they started working with us.
“And of course we monitor their progress, coaching and encouraging them. I guess that’s the lesson: If people get a great client experience and receive self-discovery as well as advice, then they’ll pay for our services. If they’re achieving personal goals as they work with us, they’ll never leave.”
“Jeepers. What else did I miss while I was … uh, away?”
“A bunch of market downturns and upturns and the Wall Street scandal and a lot of FINRA posturing about regulating RIAs. Oh, yeah, and we don’t really market directly to individuals anymore. We design our website to be interesting to the personal Internet bots of our potential clients.”
“You started speaking another language there at the end.”
Patiently, his partner explained, “When people search for a professional, they send their personal avatar out with a list of things they want, and the avatar visits every advisor website in the country, looking for a fit.”
“In the country?” Rip was aghast. “How are they going to drive to our office if they live on the other side of the Mississippi?”
“Nobody meets face-to-face anymore,” his partner replied. “The monitors are so good and the Internet is so fast that talking over Google Chat is the same as being there. We’re getting clients from everywhere in the world.”
Rip Van Planner was intrigued in spite of himself. “How do you market to a — what was it?”
“Bots or avatars. You put a lot of interesting things on your website, like videos that answer questions from clients and self-discovery questionnaires that generate instant client profiles. And of course there’s planning software that lets prospects input their own information and compare their performance with our portfolio models. Our website does most of what we used to call planning work, before we ever meet the prospect.”
“And then you specialize. Our niche these days is handling the finances of people who work in the space tourism business, based either here or on the moon.”
Rip Van Planner put the phone in his lap for a moment.
“How did I become an anachronism in seven short years?” he asked plaintively.
“You slept through the biggest, fastest transition in the profession’s history,” was the reply. “But don’t feel too bad; at least you have an excuse. A lot of advisors who claim to have been awake are still as stuck in the past as you are.”
Bob Veres, a Financial Planning columnist in San Diego, is publisher of Inside Information, an information service for financial advisors. Follow him on Twitter at @BobVeres.
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