Most of us subscribe to a 'Google it first' mentality — and investors are no exception.

The Internet has disrupted and disintermediated the value chain across many professional services, including financial planning. As do it yourself investing has evolved, the basic elements of tax preparation, portfolio management and financial planning have become commoditized.

Today, access to virtually unlimited digital information has created greater transparency and empowered consumers on many levels. And now, nearly every type of investor can educate themselves to meet some of their most basic financial needs. But are they truly prepared to go it alone? And how must advisers adapt?

In a column I published last year, I discussed how financial advisers can help investors improve their financial literacy. But as noted, access to more information is not the same as understanding the best way to use it. Access to more online tools is not the same as knowing which tools are the best to meet your needs. And not everything can be learned from a YouTube tutorial. The best way to ensure investors’ financial literacy — and their financial success — is by integrating technology with the power of guided advice.

TECH PLUS GUIDANCE
Today’s investors have been inspired by many well-known DIY brands. Flo, the upbeat sales-rep for Progressive, the Geico Gecko and the E*TRADE Talking Baby have helped create household names that have introduced countless consumers to simple, low-cost solutions for insurance, online trading and investing.

Likewise, consumers now have increased access to a range of efficient and easy-to-use robo advisers like Betterment and Wealthfront. In fact, A.T. Kearney estimates the robo industry as a whole manages roughly $30 billion today, and investors will entrust more than $2 trillion by 2020.

There’s no doubt these DIY solutions have created tremendous cost savings and greater consumer value. This is extremely important. But it does not — and cannot — compare to the added value of an adviser who can provide holistic and unbiased guided advice to develop the comprehensive financial plans that can help clients manage through complex markets and accumulate more wealth. For those clients who are considering going it alone, it may be in their best interest to consider these points:

  • The best financial plans are holistic plans

Financial planning is more than portfolio management. An adviser who has the skills and the strategy can help clients move well beyond the basic of budgeting and allocating a portfolio. After starting with short-term and long-term goals, the best advisers take a holistic approach. This includes managing across all of a client’s holdings, considering the implications of taxes, assessing and addressing macro and micro risks, integrating “held-away” accounts such as insurance and annuities and considering the full scope of a client’s assets and liabilities. Likewise, holistic planning extends beyond the individual to include the entire family, by developing strategies to finance children’s educations, care for aging parents and establish a legacy plan for future generations.

  • The best financial advisers put clients’ best interest first

Like a good doctor, a good financial adviser administers an annual check-up to look for any potential problems before they start to happen. Like a good teacher, a good financial adviser will educate, collaborate and even challenge clients to get to the next best level. Like a good coach, a good financial adviser helps identify short-term and long-term goals — and a comprehensive plan to meet and exceed them. Like a good partner, a good financial planner will commit to putting a client’s best interest first.

  • Guided advice can help all investors — not just the wealthiest

As investors accumulate more wealth, and their financial lives become more complex, they are more likely to move beyond the basics, outgrow self-directed solutions, and seek guided advice. But at any age and at any level of net worth, individuals and their families have short-term and long-term financial goals. It’s quite likely their finances are more complicated than they realize — and just as likely that they have needs they haven’t recognized and face challenges they didn’t see.

  • Guided advice can be affordable

There are many different models of compensation, from flat-fees, to hourly rates, to lower pricing for entry-level investors. And when advisers earn their fees based on assets under management, their earnings will grow only if their clients’ wealth grows. Transparency around fees, commissions and any potential conflicts of interest is important for making an informed decision for choosing an adviser who can not only build comprehensive plans, but also build plans that are in a client’s best interest.
WHAT INVESTORS WANT
As markets remain turbulent, and the world around them becomes increasingly complex, research shows that more investors seek an experienced adviser who can put their best interest first. Personalized advice for a holistic financial picture, and serving clients with a fee-based fiduciary standard are among the top three reasons that investors choose to work with an adviser, according to our most recent Advisor Authority study of more than 1,300 RIAs, fee-based advisers and individual investors nationwide.

Meanwhile, during a year marked by ongoing volatility, Advisor Authority shows that only one out of five investors are confident that robos can provide proper management and protection in response. And when it comes to investor sentiment during a time that is defined by unprecedented challenge and change, the financial outlook is far more optimistic for investors who work with an adviser (47%) than investors who do not (35%).

RIAs and fee-based advisers are well equipped to do this job right. And, as Advisor Authority shows, the most successful RIAs and fee-based advisers are using more technology to refine their practice, enhance their investing and advising capabilities and serve their clients more profitably — while also providing greater transparency, lower costs and more choice.

At every point in the relationship, when you integrate the right technology with your power of guided advice, you can help even your most educated clients learn more than any Google search session, teach them more than any YouTube Tutorial and create more value than any DIY Investing solution.

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Mitchell H. Caplan

Mitchell H. Caplan

Mitchell H. Caplan is CEO of Jefferson National, now operating as Nationwide’s advisory solutions business.