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Financial Planning > Behavioral Finance

At FPA Retreat, a Focus on the Future of Financial Planning

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Since its inception in 2000, the FPA Retreat has always been sui generis: It is as much a gathering of like-minded financial planners who draw strength from communing with each other as it is an educational conference.

At the opening session of this year’s Retreat, being held in Bonita Springs, Fla., from May 3-6, FPA President Marty Kurtz greeted the 350 attendees on Tuesday by raising the community theme: “We talk about being a community of communities,” said Kurtz, referring to the Financial Planning Association itself, and said that while FPA members fervently some share some common beliefs, such as custody of care and putting clients first, “other things we do differently; that diversity is one of our greatest strengths.”

Planner Michael Kitces of Pinnacle Advisory Group in Columbia, Md., the chair of the 2011 Retreat task force, said the Retreat’s focus would be on “what’s coming in the future," evidenced as well in a new track at the conference, an "outside the box" track where experts from outside financial planning would provide insights to the financial planners.

Kitces then introducing keynote speaker Thomas Frey, a former IBM engineer and now a futurist. Frey, executive director of the Da Vinci Institute in Louisville, Colo., told attendees that digital technology advances, evidenced in the highest degree by apps for smart phones and tablets, were creating an “untethered” marketplace and society that is ushering in an “age of Hyper-Individuality.”

Recalthomas freyling from history the problems that the Roman Empire had in matching the sophisticated mathematical developments of the Greeks, which he attributed to the limitations of Roman numerals, Frey (left) challenged attendees to ask themselves "What systems do we employ today that are the equivalent of Roman numerals?” and to determine if “financial planning is the equivalent of Roman numerals.”

His point was that consumers no longer need intermediaries to perform a number of tasks online, and that includes access to financial information and tools. The most obvious evidence of our growing untethered nature, and the potential rise of disintermediated financial advice, is in the growth of interfaces that control digital devices, that is, apps. There were only 500 apps available when the iPhone was launched in March 2008. Three years later, there are 372,000 apps online at Apple App Store, and there have been 10 billion downloads of those apps. The solution for planners, he suggested, was to “provide hyper-individualistic advice in a hyper-complex world.”

Looking at demographics worldwide, Frey argued that any regional declines in population, such as is occurring in places like Western Europe, Japan and even China, can cause "dramatic changes" in the economic supply-demand equation. Another 'untethered' section of society with implications for advisors of all kinds is the changing expectations of the workforce, he argued. Focusing on the differences between boomers and Generation Y, Frey said that Gen Y sees their work as a way to enjoy life–"they believe work should have meaning" itself, he said, not be a means to an end. While boomers might say that younger people, with their reliance on texting and Facebooking, are less interested in social interactions, Frey said that Gen Y'ers are "the most social generation of all time."

Following the presentation, Frey conceded in an interview that the role of financial advice givers was still essential, since the challenge was not so much having access to information or do-it-yourself tools, but making smart, informed decisions based on that information and tools. There’s another problem as well when it comes to helping people make financial decisions, he noted, recalling research on the subject of “confidently held misinformation.” Studies show that many people, to their detriment, often firmly believe information that is false, which leads to misinformed decision making.

Following the session, Kitces estimated attendees at the 12th annual Retreat at 350, which he said was an improvement over 2010 and 2009’s numbers, but perhaps not back at the level of attendees prior to the financial crisis.


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