The New Wave of Financial Planning

One common misconception we see a lot about financial planning is the belief that it only consists of investment management.

It makes complete sense why a lot of people tend to view it that way. From the outside, there was previously such a lack of transparency that it was difficult to really know what was going on in the financial services world.

It’s hard to pinpoint exactly when financial planning started to revolutionize into what it is today, but the new wave of financial planners don’t fit into the same box as their predecessors.

With technology becoming such a vital part of day to day life, the general population has access to everything that was previously “hidden” by the financial industry.

Look at the trading app, Robinhood. They offer free stock trading and have even broadened their services into options trading and cash management. This platform and technology is accessible to anyone. With the amount of blogs, podcasts, and YouTube videos in the world today, you can learn how to invest fairly quickly compared to many years ago.

Financial planning is becoming more about what problems the advisor or planner can solve, not what information they have access to and trades they can perform.

This can have a large benefit to clients because advisors have to go above and beyond the previous status quo to earn business. Simply choosing stocks and investments doesn’t cut it anymore. The industry is rapidly picking up the monthly subscription service model and leaving behind the typical commission and AUM fee billing.

Don’t get me wrong, there are still situations and circumstances where it makes sense for an advisor to use AUM fees. However, with investment management rapidly becoming a commodity, holistic and comprehensive financial planning is proving to be the true value an advisor provides.

Now you may be asking, what is comprehensive financial planning?

For starters, comprehensive financial planning covers your entire financial life.

From creating a budget to managing debt to making sure you have a plan for retirement, comprehensive financial planning strategies are much more than just investments.

For example, you might have started contributing to your 401k through your employer (which is awesome!). But what about everything else? Old school investment management wasn’t designed to help you determine which debts should be getting paid off first or how you should start saving for child expenses or how much life insurance you really need.

As I mentioned a few paragraphs ago, the financial industry is starting to adapt to the monthly subscription model. Think about it. What service do you currently pay for isn’t a subscription?

Netflix, Hulu, Amazon Prime, Hello Fresh, Spotify, YouTube TV, Twitch, Stitchfix, Dollar Shave Club, etc.

I’ve even seen barbers start to do monthly subscriptions.

The main reasoning behind this subscription-model movement is because it just makes sense. It allows maximum fee transparency while providing clients on-going access to their own personal financial advisor. The subscription model in financial services also allows people to have access to a financial planner without having a huge net worth.

One of the reasons that it took the financial industry so long to adapt was because there wasn’t a model where an advisor could make money just managing someone’s assets if they didn’t have a certain minimum net worth.

Now that the monthly subscription model is picking up popularity, comprehensive financial planning is becoming accessible to a younger generation in ways that weren’t previously available and includes much more than just investments.