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Financial Advisors: How to Frame Yourself as "Irreplaceable"

By ClientWise | April 13, 2013

As a financial advisor, even a very successful financial advisor, are you irreplaceable?

New York Times columnist and author, Paul Sullivan, poses this very question in a piece in today’s Times, “Technology’s Impact on the Value of Financial Advice

Straight away, he asks the question:

  • Is technology good enough to replace guidance from financial advisers? 

Of course, this is an interesting question. But not an original one.

I seem to recall similar headlines in the 1980’s…with the introduction of the mass-marketed personal computer.

Also seem to recall this same question being posed in the late 1990’s…about the time that “google” stopped being a noun, and became a verb

So, are investors more able to make logical investment decisions today, 30+ years after the introduction of the PC, and 15+ years after the World Wide Web began to explode?

To a large extent, this is a rhetorical question, especially as one juxtaposes this inquiry with this recent and engaging blog post from Russell Investments’ Helping Advisors Blog, "Time Out! Where have all the investors gone?”

Russell points out a trend that most financial advisors are fully cognizant of, i.e. many investors have missed out on the 4+-year rally that has been happening since the beginning of 2009.

  • Datapoint #1: Since January 2009, investors have withdrawn $336 billion from long-term equity funds. During this same time period, they added $1.1 trillion to fixed income mutual funds.
  • Datapoint #2: Since January 2009, the Russell 3000 Index is up 81% (And the Dow is up 69%...the Nasdaq is up 109%, etc.)

As I view these points, I am reminded of a quote by Ben Graham, who said, “The investor’s chief problem—and even his worst enemy—is likely to be himself.”  This was true in 1949, when Graham published The Intelligent Investor. It appears to be no less true today, 64 years later.

Many investors, even the very savviest, are still susceptible to the emotions and behavioral influences that cloud investment judgment. It seems to us that even with the advanced pace of technological change, and possibly even because of it, the role of the financial advisor is undiminished. 


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Topics: Technology Client Engagement

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