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In 2019, Financial Advisors Need to Focus on Value, Technology and a Fiduciary Standard

By Kevin Keller, CAE January 02, 2019 LinkedIn

The adoption of comprehensive financial planning is on the rise. Planners are moving to provide deeper levels of advice that account for different goals throughout their clients’ lives – from buying a home to paying for college and eventually retiring. The most successful advisors help their clients navigate each of these life stages and generate plans that allow clients to achieve their goals along the way.

Working with a CFP® professional provides consumers with confidence today and a more secure tomorrow through a holistic and personalized approach. And in 2018 we saw an increase in the number of consumers seeking, and willing to pay for, financial advice – and that will only continue to increase in 2019.

Perhaps this is because CFP® professionals are seen as navigators, partners and counselors – not just financial advisors – and 71 percent of those working with a CFP® professional say they are confident about their financial situation, according to Heart + Mind Strategies. Research by the consulting firm also found that the more than 8 in 10 Americans want an advisor who can provide a comprehensive plan that takes their holistic financial situation into consideration.

Today’s investors are digitally savvy, well-informed “do-it-yourself” consumers. The increased interest in technology platforms does not eliminate the need for advice from a trained financial planner, but rather emphasizes the importance of working with a professional. The access to real-time, unfiltered data means investors need an advisor’s insight and expertise to understand what the data means. Additionally, investors still look for the value humans alone can provide when it comes to the inherently emotional aspects of financial planning, including empathy and trust.

As we look forward to 2019, CFP® professionals are uniquely qualified to guide investors through a softer economy with more value-driven services. Here are three important rules of thumb to keep top of mind.

Provide value to stand out from the rest of the crowd.

Advisors can transform their clients’ experiences – and build better relationships with those clients – by elevating the value of their advice and services. Similar to Maslow’s Hierarchy of Needs, Harvard Business Review reported that advisor services need to address four types of needs – functional, emotional, life changing and social impact. Functional services can include the quality of service offerings or the time advisors save clients, while emotional services can include adding therapeutic value where necessary or reducing a clients’ anxiety. Life-changing services can include providing hope or motivation and social impact services can include charitable gifts or causes.

When an advisor addresses these needs, particularly as part of a holistic financial plan, they provide value, build stronger relationships and increase trust with their clients. They also encourage client retention and differentiate their services, which becomes increasingly important as more Americans seek financial planning advice and the popularity of digital advice technology increases.

Make technology human.

Financial planners should view technology as a key tool in their arsenal. Advanced technology allows firms and advisors to become more efficient – enhancing their abilities as an effective coach and counselor. As technology continues to expand, the future belongs to those who marry the relationship between technological and emotional intelligence. While online computer algorithms might be able to crunch numbers and provide generic advice based on available data, they don’t take into consideration how inherently emotional money is for most people. An advisor understands this and the unique situations of each of their clients. Because a financial planner might be the first person to hear about good or bad news, CFP® professionals are in a unique position to help clients with insights, experience and personalized recommendations with the client’s best interest in mind – not just numbers on a dashboard.

At the same time, advisors can use technology to streamline and automate the tactical and time-consuming components of financial planning, including gathering data and crunching numbers. This opens up an advisor’s time – enabling them to prioritize creating deeply personalized financial plans. It can help them to center the more “human” aspects of financial planning – providing clients with the most effective and efficient services to navigate their financial journey.

Always act in a client’s best interest.

According to our recent election-night survey conducted by Heart + Mind, consumers strongly believe their financial advisor should always work in their best interest (79 percent). CFP® professionals understand the complexities of the changing financial climate and know how to make recommendations that keep client interest at the forefront. They have completed extensive training and experience requirements and are held to rigorous ethical standards.

To remain the standard of excellence in personal financial planning, a new Code of Ethics and Standards of Conduct (“Code and Standards”), will be effective October 1, 2019. The new Code and Standards adds even more rigor to the CFP® certification requirements and is an expanded application of the fiduciary standard by requiring CFP® professionals to act in the best interest of the client at all times when providing financial advice.

As the financial planning profession moves toward holistic, and deeper, financial advice, successful CFP® professionals will always provide their clients with valuable services, act in their best interest and stay on the cutting edge of technology to develop the strongest recommendations possible.

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About the Author: Kevin Keller, CAE is Chief Executive Officer of CFP Board. Under his leadership, in support of CFP Board’s mission to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.