Kitces, who announced earlier in the conference he is joining the Journal of Financial Planning as practitioner editor, started his presentation with a discussion of Perry the Planner and Carl the Client.
“Perry and Carl have had a relationship for four years,” he explained. “Carl is on ‘the cloud’ and can see anything he needs to in his account. Updates are continuous and ongoing as it is all numbers-driven. Perry can also review and monitor Carl’s account to see how well his goals are being achieved. Perry and Carl connect through various communication tools. Oh, and one last thing—Perry and Carl have never met in person.”
This, Kitces claimed, is the future of financial planning. It will “change everything about how we develop, deliver and communicate financial plans.”
“I’m here to throw the football down the field eight or 10 years into the future,” he said. “The Internet has been around for two decades, but we’re still figuring out how to integrate it into our lives and businesses. The medical community is now grappling with this, as very often patients come in and are just as informed as the doctors are about their particular afflictions.”
The result was a session heavy on questions about what future advice models might look like, including:
- What is the value of the advice-giver in an increasingly technology-driven world?
- Planners are experts when finding solutions on the Internet—similar to finding a needle in a haystack. Will improvements in search, sharing and social media change that?
- What if the answer to a financial problem came up on a Google search exactly as you wanted?
Borrowing heavily from Blue Ocean Strategy, a business strategy book written by W. Chan Kim and Renée Mauborgne, Kitces said that in order for advisors to adapt to the digital age, they must focus on what matters to clients and eliminate everything else in a quest to develop something new.
“What currently creates the most work in your practice? What has the most cost? What can we leave behind: in-person meetings, written financial plans, what else?”
On the flip side, he continued, what experiences and values are financial planners not delivering that they could?
“How much more efficient would your practice be if you used video and Skype and no longer had to travel? Can online software replace the physical financial plan document?”
Future competition, he added, will increasingly come from Silicon Valley. While financial planners have ramped up their technology, technology companies have ramped up their financial planning capabilities. He listed companies like Personal Capital, LearnVest, Betterment, Jemstep and Veritat Advisors as examples of technology platforms with low costs that are on the forefront of the digital financial planning wave.
“For those of you who don’t think the trust aspect can be reached online, consider that it was only 10 years ago that most of us said we would never enter out credit card information into a website,” he concluded. “We blew through that trust issue. And it’s never been and issue for Generation Y, a cohort that is larger than the boomer generation. For them, technology ‘just is,’ it’s an extension of their self.”
Check out AdvisorOne’s full coverage of 2012 FPA Retreat.