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Financial Planning > Behavioral Finance

Welcome to the Third Wave of Financial Planning

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The financial services industry has grown through human interaction, but the last few years have seen an explosion of financial technology that has reshaped client-advisor relationships. In fact, a clearer future has emerged where client-advisor relationships are enhanced rather than eliminated by the efficiencies provided from emerging and established fintech.

In 2016 and 2017, there was a constant flow of headlines questioning whether fintech — more specifically robo-advisors — would “take over the world” and if the days of the human advisor were numbered. By 2018, the conversation shifted toward the importance of not losing the personal connection when offering financial advice.

In 2019, we will enter the third wave of financial planning. Advisors and financial professionals should be prepared for the changing landscape of client expectations and demands.

The first wave of financial planning was built around cash-flow-based planning, where advisors provided advice to clients via a financial plan. The second wave shifted to goal-based planning, in which advisors transitioned to a philosophy that placed less emphasis on the precision of cash flow calculations and instead focused more on meeting clients’ long-term objectives.

The third wave, which we believe will define 2019 and the years to come, will merge these two philosophies ­ — cash flow and goal-based planning — as well as incorporate other fintech innovations. Advisors will be able to offer clients a more holistic approach, being more like a financial life coach than ever before. Further, advisors are better positioned now to leverage the inherent stickiness of financial planning as a practice while utilizing other digitized client touch points.

Riding the Third Wave

How can riding this third wave help your practice? When it comes to differentiating your firm and competing for business, being an early adopter of the next generation of financial planning philosophies can set you apart. While your counterparts are still working through their goal-based planning approach, you can become a holistic financial coach to both prospective and existing clients.

While we believe the industry will shift in this direction, it is also critical to consider the so-called “Amazon effect” occurring with consumers. Client demands have shifted, and in today’s environment we are seeing all demographics — millennials, Gen Xers and baby boomers — expecting and demanding more out of their advisor and financial plan. Advisors that are quick to embrace a myriad of digital experiences and human advice will be well positioned to attract and win new clients with heightened expectations.

Thus, in 2019, we expect financial technology to be viewed as a critical backbone to any advisor’s practice management plan. Incorporating a technology stack that promotes simplification — to simplify both advisor workflows and processes — can bolster client interest and retention. It is also important to focus on technology that can offer true efficiencies.

Advisors should feel empowered with technology so they are able to present clients with updated plans in just minutes. Efficient software capabilities will not only help retain existing clients and capture the business of younger demographics, but also increase overall workflow efficiency that allows advisors to serve a more diverse client base to its full potential.

Broader fintech trends are ever-changing, especially as consumers and the industry evolve, but we believe it will remain a critical component in 2019 and be an ever-important aspect of bolstering practice management needs. As we enter this third wave of financial planning, digitized planning solutions will be a key tactic for any firm that expects to lead the way.

Angela Pecoraro is CEO of Advicent, a financial planning technology provider based in Milwaukee,. For more information on the company, visit


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