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 Plancorp Team By: Plancorp Team

Young or old, student or professional, head of household or single, there is one constraint we all have in common: time.

Not surprisingly, the social shift toward 24-7 availability, instantaneous communication and an irremediable sense of urgency is not only central to the modern zeitgeist, but it also directly influences the way people engage with their finances—and how they seek ways to simplify them with technology.

This has resulted in a massive shift in the financial services industry. Both the digitization of financial services, as well as a more index-focused approach to investing, are happening faster than many people care to talk or think about. Yet, it’s an important truth for those of us in the industry to recognize if we want to keep up.

Here are five of the most major changes happening in the financial services industry.

1. Investors prefer indexing to traditional, “Wall Street-based” investments.

In the past, the majority of investors followed a traditional, “Wall Street” approach—one that revolves around trying to pick stocks, time markets or move between sectors.

For years now, these strategies have been under pressure due to underperforming broad benchmarks. In fact, according to the most recent S&P Indices Versus Active (SPIVA) scorecard, 82% of all U.S. Equity Funds lagged behind their respective benchmarks over 15-year periods. It follows that investors are taking a more educated approach to their financial decisions, recognizing that the key to a successful investment program is not an attempt to “beat the market,” but rather to control costs and focus on asset allocation.

2. Clients want to see their complete financial pictures.

As clients’ financial lives become more complicated, it becomes increasingly important that they have one place to view a quick, yet comprehensive, financial picture—which explains the popularity of apps like Mint.com.

Unfortunately, although these apps give people access to their financial numbers (which is certainly step one), they fail to provide context. Clients want reassurance that they are on the right path toward their life goals. I hear a lot of, “How do I make sure I don’t do something stupid?” and “How do I make sure I am making the right decisions with my financial life?” Those questions are impossible to answer without a comprehensive understanding of someone’s goals and dreams, in addition to their financial information.

3. Robo-only investment advice isn’t enough.

While “robo-advisors” give investors real-time, digital solutions to managing their investments, they don’t offer the proactive planning advice clients need. Most focus only on the investment component of clients’ financial lives. They also lack the softer, emotional skills of a human advisor.

Even if it can hear and process words, no computer, app or website can pick up intonation of a client’s voice and dig deeper into what the true issue is. Oftentimes, our active listening and follow-up questions are what allow us to discover clients’ deep-seated concerns, as well as their future hopes and dreams.

4. The demand for proactive advice continues to increase.

The modern investor wants proactive advice for her financial future, which takes into account her concerns with market fluctuations, personal risks, personal financial life goals, etc.

Although computers are excellent at solving identified problems, they may never be able to identify potential problems before they occur. That’s why it’s important for investors to also have a human advocate to give good advice and counsel that mitigates those fears and helps them avoid making financial mistakes.

5. Transparency at every level is non-negotiable.

The proliferation of technology—and, therefore, consumers’ increased access to information—makes it imperative that companies adhere to a model that is completely transparent to the end investor. In the future, transparency will be paramount in terms of being a provider of choice.

Other industries are ahead of the game in this regard. For example, consider online clothing company Everlane, which gives consumers a complete breakdown of cost structure per garment. Eventually, consumers will demand models like these in all aspects of their lives—including wealth management.

Digital Meets Human

So, how should the financial services industry respond to these changing client demands—preferences that at sometimes require human expertise, and at others digital solutions?

At Plancorp, we believe the answer lies in a hybrid-robo solution, which marries the best of human and digital. The biggest value add that advisors have always had is in the behavioral space—helping people make good decisions and avoid mistakes. That value is rooted in forward-looking conversations with clients, and supported by good facts, figures and analysis. Computers can do the latter portion better than we advisors can, which is why a hybrid-robo advisor approach works so well. Fully integrating best-in-class technology will allow our people to spend even more of their time where they provide their greatest value, working directly with clients.

We are excited about the future, especially when it comes to providing our clients with the ability to engage more deeply with our advisors and their own financial lives. In a time when the average American spends more than 10 hours a day on devices (on top of an already time-deficient lifestyle), we recognize that this type of ongoing digital support and engagement will be critical to our clients’ success.

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Plancorp started with a unique philosophy: Always put your clients’ interests ahead of your own, and you’ll build a successful business. That was in 1983, but the sentiment still drives every decision we make. After 40 years of helping individuals, families and business owners plan for financial independence, our commitment to serving as financial life advocates is stronger than ever. More »