How Will Financial Planning Change?

Within 30 years, financial planning will have largely completed its transition from a sales-based approach to an advice-driven professional service. Decades of commoditization of financial services products will make it increasingly clear that the value of planners is to provide advice and guidance to successfully navigate the financial world, not merely the selection of products. However, this is not to say that financial services products will become irrelevant; instead, as with other professions, specialization will become an absolute necessity for those who wish to focus on implementing solutions with clients.

In a similar manner to the evolution of the medical profession, generalists will provide initial financial solutions and “diagnose” more substantive issues; specialists will have the depth of expertise necessary to implement more advanced recommendations and solutions. In fact, the body of knowledge will have grown so broad and deep that specialization will become a virtual necessity for some areas of planning. Practitioners will either need to have the skill-set to be an effective generalist, or will be forced to define and refine their niches and specialized education, or face the risk of being both ineffective and inferior in the marketplace.

In addition, the increasingly knowledge-based focus of financial planning will make it significantly more difficult to become a financial planner. The necessary key to deliver these services successfully will be the acquisition of the core financial planning body of knowledge through advanced education. This challenging path to entry, as with other professions, will reduce the number of people who become financial planners by setting a high bar on the requisite knowledge base — with the ultimate benefit of a more educated and technically proficient practitioner delivering services to the public.

However, this is not to suggest that financial planning will become solely about the accumulation and application of technical knowledge. Instead, it will be equally important to have strong communication and sales skills — not to sell products, per se, but to “sell” a recommended solution and be capable of persuading people to take action steps to better themselves. Just as the doctor’s role is not only to explain the risks of obesity and how to diet, but also to help individuals change their behavior for the better, so too must the financial planner learn how to help people take the steps and change the bad habits necessary to achieve financial success. The “softer side” of planning skills will become increasingly crucial to blend in with technical knowledge.