Folio Institutional, a financial technology provider, published a list of top trends in 2016 that will affect the wealth management industry. The company, of course, thinks the impact technology has on advisors will be the biggest trend of the year, but more interesting is what it believes is driving the digitization of the industry. Folio believes behavioral finance will continue to shift from goals-based planning towards holistic financial planning, and that advisors will start thinking about millennials more in terms of investing traits instead of their age. The firm also predicts an uptick in private investing, ESG investing, and mobile transactions among clients. Advisors will need to be technologically prepared to meet these demands.
Confessions of a Stock Pusher
Erik Carter, a financial planner with Financial Finesse, which creates financial education programs for workplaces, writes about his previous life as a financial advisor for a brokerage firm and what his clients didn’t know. For instance, he says his main qualification for his first job at an investment brokerage right out of college was selling knives door to door. “You might think that perhaps the brokerage firm taught us what we needed to know about financial planning, but the training was centered around sales tactics with just enough insurance and investment knowledge to avoid breaking the law,” he writes. Among other lessons, giving advice that only benefitted the firm, not being able to beat the market, and not helping clients in ways they needed it the most. The system, he says, is getting better, and he gives props to XY Planning Network, Alliance of Comprehensive Planners and the Garret Planning Network for fee-based advisors, as well as the robos.
Life Delayed
Student debt is posing a significant hardship on an increasing number of young Americans, according to a study by American Student Assistance. The study, entitled Life Delayed, shows that 62 percent of respondents report that student debt is a burden on their personal budget when combined with other household spending. Thirty-five percent said it was difficult to buy daily necessities because of student loans , 52 percent said it affected their ability to buy a car, 55 percent said it affected a home purchase and 62 percent said they have put off saving for retirement or investing because of college debt. The nonprofit suggests controlling college costs and expanding grant aid to keep borrowing levels low, as well as lowering interest rates on loans and expanding financial education for students and alumni. “There is no doubt that higher education is still one of the best investments that people can make in their future,” said John Zurick, ASA executive vice president. “However, while the intrinsic value of post-secondary education is still apparent, there are downsides if a more highly educated generation becomes a more indebted one.”
Happy Holidays from Morningstar’s Kids
Kids say the darndest things. So to wish investors a happy holidays, Morningstar decided to talk to their employees’ children about retirement, diversification and emerging markets. David Blanchett, head of retirement research, interviewed the children, and some had a pretty good handle on investing. “If you had to pick what to invest in, would you invest in corn, soy beans or candy canes?” Blanchett asked one boy. “Corn, cause you can grow more of it. You can’t grow candy canes.” Other kids didn’t have much of an interest in what their parents do for a living, or in investing in general. But Blanchett still made an effort to relate to them. “If princess Anna and princess Elsa of ‘Frozen’ were both managing a mutual fund, who would do a better job?” he asked one little girl. “Elsa.”
