How often do you get anything of substance from a YouTube video? We all enjoy the cute cat antics and nasty skateboarding shots, but an instructional piece from eMoney Advisor takes square aim at the argument that investors should make their own financial plans by following green lines and listening to talking babies. They’re sticking up for the advisor and the importance of professional help.
The founder and CEO of the wealth planning and money management provider for advisors says his research shows that close to a billion dollars was spent last year by the five” big guys;” E*trade, they of the infamous talking babies; TD Ameritrade; Vanguard, Fidelity Investments, which instructs investors to “follow the green line” to investing success; and Scottrade.
“Their message is very consistent, and it is that advisors are overpaid, that you don’t need an advisor and technology will provide your solution,” he said. “It’s so easy a baby can do it. And once you come up with a plan just stay on the [green] line and everything will work out.
Noting he was an advisor for 18 years, Walters say he understands the value of an advisor and the accountability they bring.
“I see the landscape changing and I’m worried the end-user client will make enormous mistakes,” he explains. “We saw them make those mistakes with the latest correction; how they panicked and sold their portfolios and now they’re barely getting back to where they were. A good advisor could have helped navigate the client through that whole tumultuous time. No one’s standing up for the advisor and no one is talking about the value of an advisor.
So how does someone choose an advisor? Get references and interview the advisor to gauge their personality.
“I’ll tell you how I picked the advisor I’m working with,” Walters offered. “I found an advisor that is approximately the same age as my wife and I, who has a net worth similar to mine. He understands the things that we’re going through. I think clients don’t think of that. They’re approached by reps and the big message is the product and they get caught up in the fees.”
He laments that current marketing efforts, especially TV advertisements, talk incessantly about how knowledge is power.
“You hear that over and over; it’s overdone. But knowledge is value, in my opinion. I want somebody that has knowledge because to me that’s the value. I want to leverage off that person’s value, and I want somebody that can be held accountable. The last time I checked, that little green line is not going to be accountable.” He explains that eMoney is an interactive planning system that allows the rep to “show off his wares.” The advisor can sit with the client and show them the effects of downsizing a home, refinancing their properties, putting assets in a trust or rebalancing portfolios. The impact can be illustrated in real time on the screen.
“The problem is that typically most systems out there are paper-based. So you run your presentation and you say ‘This is what you should do.’ The client says ‘Well what if I do this instead? The only thing the advisor can do is say ‘Hold on, I’ve got to rerun it. We’ll see each other next Friday.’ Those days are over. And it’s not ability to get to a product. It is intellectual property and it’s the advisor’s life experiences. People will pay for that. We’ve got to go back and humanizing the position of the rep.”
Read How to Talk Risk Without Scaring Your Clients on AdvisorOne.