Book Review: “Exploring Advice” Contains Insights from 39 Industry Thought Leaders

Book Review: “Exploring Advice” Contains Insights from 39 Industry Thought Leaders

According to Kevin Knull, CFP®, the President of PIEtech, the developers of MoneyGuidePro financial planning software, the financial industry is undergoing a revolutionary shift driven by five key factors: The Department of Labor’s new regulations, asset management commoditization, fee compression, an increasingly competitive environment, and a more informed consumer. Given these trends, Knull felt there was need for a book to help improve the industry, so he crowdsourced a book that explores the aspects of a good financial plan and quality advice.

The result is a book with contributions from 39 industry experts, including the author of this article, yours truly Joel Bruckenstein. These contributors share their unedited insight about good financial advice, the components of a quality financial plan and the role of a fiduciary in today’s environment. Data from over 1 million plans and survey results from 1,653 financial advisors add depth and breadth to these insights.

exploring-adviceThe book is called “Exploring Advice: What You Need to Know About Good Advice, A Quality Financial Plan and the Role of a Fiduciary.”

The list of contributors is an impressive one. It includes a former SEC commissioner, a leading ERISA attorney, top executives from wirehouses, banks and broker/dealers, and many other industry thought leaders.

“While the principles-based Conflict of Interest rules redefine the financial advisor’s role and responsibilities and require an advisor to act in the retirement investor’s best Interests, the rules do not provide a clear path as to how advisors and their firms must meet those requirements.  The objective of this book is to prompt anyone who provides advice to explore what it means to render good advice and a quality financial plan  – which we think is the most prudent and easiest way to meet the spirit of the DOL regulations,” said Knull.

IMPORTANT OBSERVATIONS

At the outset, Knull makes a number of important observations. He argues that “good advice” is advice that is in the client’s best interests, and that one must fully understand the client in order to comply with the DOL rules. Thus, he argues, “know your customer” has morphed into “understand your client.” He further argues that the most significant takeaway of the new fiduciary rule is that Knull’s firm surveyed over 1600 financial advisors to find out if they thought that they could fulfill their roles as fiduciaries without a financial plan. Only 33% believe it is possible to do so. The best interest standard places the burden of proof on the advisor.

One startling statistic that Knull shares with readers is that advisors apparently do not sufficiently discuss and plan for clients’ financial goals. When an advisor drives the goal setting for a client during the creation of a financial plan, they include, on average, 2.7 goals; however, when a client drives the goal setting process, those plans average 7.5 goals. Clearly, advisors need to do a better job of eliciting financial goals from clients.

There were a number of recurring themes that numerous contributors echoed. These included the following:

  • A financial plan is an ongoing, ever-changing process. It needs to be revisited and adapted.
  • Investment advisors are fiduciaries. The needs and interests of the client come first.
  • The highest probability for success is to combine human insight with technology.

EXCERPTS FROM CONTRIBUTORS

Here are a few other insights that I thought worth sharing:

“An advisor must ask great questions and be more of a listener to fully understand the client’s needs/perspective.” — Marty Bricknell, the CEO of Mariner Wealth Advisors

“Neither active nor passive management is inherently good or bad advice, yet bad advice regarding the passive versus active management abounds (more often for the latter).”  — Mercer Bullard-Founder and President of Fund Democracy, Inc.

“Rise of near-effortless and mostly automatic saving and investment platforms like Acorns, Digit, Wealthfront, Betterment, etc. are contributing to this change in the investment community.” — Ryan Caldwell-Founder and CEO of MX

“Financial services industry is still adapting to increased choices and decreased switching costs.” — Ryan Caldwell-Founder and CEO of MX

“It is irresponsible for a financial advisor to suggest he or she is acting as a fiduciary if the advisor doesn’t have accurate, real-time data”. — Ryan Caldwell-Founder and CEO of MX

“Setting smaller milestone and goals throughout the plan can help motivate and encourage the client.” — Caroline Dabu-VP and Head of BMO’s Financial Group’s Wealth Planning Group

“Retirement and investment returns are not really measured in dollars, but in peace of mind.” — Marco De Freitas-Managing Director of Investment Products and Guidance at TD Ameritrade

“Planning is about continuous alignment between reality and one’s expectations and dreams.” — Marco De Freitas-Managing Director of Investment Products and Guidance at TD Ameritrade

“The interactive component of financial planning will continue to grow, extending the ability to be interactive and providing more ways for clients to do some things on their own. But, no matter how automated things become, there will still be a point where a client has to click a button and make a choice. That’s where financial advice and planning from professional advisors will be necessary.” — Dean Deutz-VP and Wealth Initiatives Senior Manager of RBC Wealth Management

“A truly successful advisor needs to integrate intelligence, technology, and EQ (Emotional Quotient: consists of empathy, understanding, and the ability to read people, as well as the ability to react to nonverbal cues or body language).” — Ron Kruszewski-Chairman and CEO of Stifel

AVAILABLE ON AMAZON NOW

Exploring Advice contains hundreds of useful insights from some of the brightest thought leaders in the industry. With the current industry focus on DOL, fiduciary, and the importance of financial planning, this book could not be more timely, and it should be required reading for anyone with an interest in this subject. The book is currently available on Amazon in paperback format. I’m told that hardcover and Kindle versions will be available shortly.

If you are attending the T3 Enterprise Conference being held November 2-4, 2016 in Las Vegas, you can hear Knull and other industry thought leaders discuss the book’s core concepts in the morning, November 3rd (more info here in this prior T3TechHub announcement).

Joel Bruckenstein
Joel Bruckenstein
Joel P. Bruckenstein, CFP®, is Publisher of the T3 Tech Hub (formerly the T3 newsletter) and the producer of the Technology Tools for Today (T3) Advisor Conference, the only annual technology conference for independent advisors, as well as the Technology Tools for Today (T3) Enterprise Conference. Bruckenstein is an internationally acclaimed expert on applied technology as it relates to the financial service industry. He is the co-author of three books: Virtual Office Tools for a High Margin Practice, Tools and Techniques of Practice Management, and Technology Tools for Today’s High Margin Practice. Joel’s monthly technology columns appear in Financial Advisor magazine and Financial Planning magazine. In addition, he compiles the annual technology survey for Financial Planning magazine. Bruckenstein has for more than twenty years advised financial service firms of all sizes on improving their technologies, processes and workflows. For more information about Joel Bruckenstein and the services his firm offers, please visit www.JoelBruckenstein.com

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