Your financial life is more than 1's and 0's.
What was financial advice like before 1993, when yahoo officially launched, and people could type a question into a box and get an answer? Or before E-Trade began offering online brokerage services to individuals in 1992? I was 4 years old, but my father was already a CFP® professional, and lived it all.
There was only one way to invest, through a broker. You asked them what to buy, they told you their hot pick, they went and found a seller, made the sale, and charged a commission for the work done. At least you had to call them and hear their voice.
I can download an app on my phone, transfer in real money from my bank account, read a blog by someone I don’t know, and buy their suggested stock or fund for a $0 fee.
A financial advisor held the keys to the kingdom, as the arbiter of financial rules, reasonings, and strategies. For better or worse, they had their hand on the doorknob, and you had to go to them for information.
100% (ish) of the financial facts that you need to be financially successful are found on the internet, for free, instantaneously.
Did I just crush the value of a financial advisor? Not even close. Did I just open a can of worms? Absolutely. Will I go into how these “freedoms” have played out in real life families? If only we had enough time!
What I will say, though, is that the value of financial advice from a financial professional has become complicated. Now that much has changed, the concept of "value-add" may be a bit different than you think.
I meet people every week who still apply old value systems to these new realities. I can see it in their eyes as soon as I tell them my profession. It has almost become cool not to work with a financial advisor / planner. I would wager a guess that this is why many people, especially when they are young, never sit with a money professional. And also why the majority of younger people never work with their parent's financial advisor.
Believe it or not, I have been asked the question straight to my face, “With current technology, why would I need a financial advisor?”
So, I thought I’d name two basic reasons. These two values have always existed in "real" financial advisor relationships, but their perceived value has been hidden because it is difficult to quantify, and most of the world's attention hovers around things that are quantifiable. It is these two values that will never change.
Two things a human advisor can give you that a Google search cannot:
When it comes to the introduction of instantaneous and unlimited information via the internet, for every bit of convenience provided, it has also added another problematic layer…
Overchoice. The paradox of choice.
It’s not that you can’t find an answer. You ask a simple question; you get 100,000 answers in .77 seconds. No, there is a new question now. Which answer do you believe? How do you know your source isn’t just a teenager writing a blog (or posting financial advice on TikTok)? How do you know your answer pertains to the current year? How do you know it is not over-simplified just to catch your eye and make you read another article (or click on their paid advertisement)?
See, people get really upset when they find out that financial advisors must constantly manage conflicts of interest in their relationships. The rub comes with the territory and has singed many honest people looking for help. So, it is not surprising that I've seen many financial professionals advertise pricing or processes that allegedly “eliminate” a conflict of interest.
Let me break the news softly, there is no such thing as zero conflict of interest. We are humans! We are always battling our own agenda against someone else’s. Money is not the currency of financial advice, trust is.
The scarier truth is that algorithms have conflicts of interest, too, but no heart with which to navigate. There is a reason why you see articles titled “Here’s how much you should have in your 401k based on your age,” or “This is how much you need to have saved in order to retire.”
Your search engine is learning your fears and addictions and will feed you information that has been titled in a way that gets you to click on them. This way, that same fear or addiction will grow, bringing you back for more, and their advertising dollars won’t be in vain. Don't believe me? See if you can make it through an episode of Rabbit Hole without cringing just a little.
A human advisor can help you sift through all of the rules, regulations, and opinions so that you can pay attention to the ones that matter. It is almost like an advisor’s role has transitioned from gatekeeper to curator. What costs more, an annual financial advisor fee, or time spent with self-made blinders or in analysis paralysis?
I am not talking about a notification on your phone telling you to rebalance your Schwab portfolio. I am talking about a warm-blooded human asking you if you ever got around to actually acting on the advice you were given? Or asking if you realize how small decisions made over time may completely diverge your future.
Many people have incredible financial opportunity in front of them, but because "life gets in the way," they never get around to taking those opportunities. It is not that they didn’t have the proper tools, or the proper information. It is that they didn’t start. And they probably didn't start because they tried to embark solo.
Your Google search cannot initiate actual change, only give you an ideal to chase. This is why there will never NOT be coaches. We cannot do it alone. Self-accountability only goes so far, even for the most centered people.
So, take note of how the internet has become your financial advisor. Invest in a relationship that can give you much more than a google search. Today, a financial advisor’s value reaches beyond technical knowledge and book-smarts (although those are particularly important). Now, more than ever, their effectiveness is also based on their skill as a thinking partner, a listener, a sifter, a worst-case-scenario ponderer, a guide, a connector, and an encourager.