by Dan Moisand, CFP®
Dan Moisand, CFP®, has been a practicing financial planner since 1991. He is a principal at Moisand Fitzgerald Tamayo LLC in Melbourne, Florida, and former president of FPA.
I cannot mimic it with my voice, but I can readily recall the sound. I’m sure you can too. For several years, the sound of a dial-up modem was the sound of connection. These days, the sound evokes a chuckle laced with nostalgia. How silly we were marveling that it only took 10 seconds for a webpage to load.
For a heartier laugh, I think back to the days when we would run a hypothetical illustration for a client. We would set the hypothetical to calculate and print and then go to lunch. When we got back, the dot-matrix printer would be about finished. Remember those and the sound they made? These days, my kids have no experience with pay phones or, sniff, ditto machines.
Technology changes constantly and quickly, and for the most part, this is good. The depth and breadth of services we financial planners can provide to our clients have never been deeper and broader than they are today. Technology has a lot to do with that.
From a very high level, most people seem to want the same things financially. They want to be able to feed, shelter, and educate their children. They want to be able to retire someday. They want to be able to help those closest to them. They want their money to support their lives.
Each family is different. The details that come to light regarding these broader goals are often the difference between success and failure. As we all know, you can’t make one decision financially without eventually experiencing some kind of ramification. Overpay your taxes, mismanage your debt or assets and there is less money going toward your goals. Spend too much now and there may not be money to spend later. Spend too little and you may be shortchanging your life.
With a nearly infinite number of variables and twists and turns, technology helps us assess our clients’ situations. We do that far better today than we did 10 years ago, and we did it better then than 10 years before that, largely on the back of technology.
We’re in the business of providing guidance and advice to help people reach their goals—and it is a business. Technology makes this a little easier. We no longer enter our business expenses in ledger books; we enter them in software that instantly tells us when the math doesn’t add up. We track many bits of information about our clients that enable us to make sure they don’t miss any tax deadlines and that follow-up calls are placed in a timely manner. No more Rolodex or tickler files. We deliver information to clients in a variety of ways unavailable to us a short time ago.
Potential clients who need our expertise can find us from anywhere in the world with Internet access. Likewise, we can find peers anywhere in the world to help us solve problems, get answers, and deliver the best advice we can to our clients. Yes, indeed, technology is good.
The Dark Side of Technology
But there’s a dark side as well. Keeping up with ever-changing technology is a challenge. We have to understand what it can do, how it may be useful, and how to get it to work properly. When things don’t function the way we believe they should, our stress levels go up and frustration runs high. We can get fidgety when we are unplugged. Everything seems to need a unique username and password. Nothing seems to update smoothly. Upgrading one program can cause others to function poorly or not at all.
Lately I’ve been reading a lot about the rise of the so-called “robo-adviser.” These technology-based solutions are going straight to the consumer with software comparable to what many advisers use in their practices. These services have moved beyond basic asset allocation and simple retirement calculators; they are pretty slick and seem to appeal to young people who don’t think they can afford a financial planner. Everything’s going mobile and new apps are rolling out all the time. The media presents this as a threat to financial planners.
Provide Value that Technology Cannot
I’m sure some planners will be threatened by this, but I’ll share with you why I won’t lose a wink of sleep over it. The trend of advancing technology has always existed. Just during my 23-year career, technology has done nothing but improve. The technology available to the public has become more sophisticated, yet the business of financial advice generally, and financial planning in particular, has continued to grow at a substantial pace. Personal finance has gotten more complicated and more responsibility has been placed on individuals to make sense of it.
This rising demand only partially explains the growth. We haven’t been replaced by machines because we provide value technology cannot. From a technical nuts-and-bolts expertise perspective, this business has never been about number-crunching, it’s about decision-making. You can crunch numbers all you want, but if you don’t know what those numbers mean and what to do with them, you may cause more problems than you solve.
An MRI gives far more detailed data than a basic X ray. Nonetheless, a doctor with a basic X ray is more likely to help a patient than a waiter, even if the waiter has the output from an MRI. This is a function of training and experience. We often spot mistakes prospective clients didn’t even know they made. Most people simply do not have the expertise necessary to effectively process the information they receive and understand the ramifications of the decisions they’re making.
Technology has made people smarter about some things but not enough. If you’ve ever trained or mentored a career changer, you understand what I mean. They are known in their previous circles for being astute about money. They think they know what they’re doing, but it doesn’t take long for them to realize there is a lot more to financial planning than simply picking some mutual funds. The sooner they come to this understanding, the sooner they turn their attention to developing the expertise that brings meaning to the crunched numbers—the expertise that makes a difference.
Most people, quite frankly, are not all that interested in financial matters. They want to make good decisions and they want their money handled well, but few actually want to spend their precious time and energy engaged with the nuts and bolts of personal finance. No matter how slick the iPad app may be, they won’t want to use it.
But the ace in the hole for human advisers is we can do things that no automated approach can do. Chief among these is that we can care about the client, truly care. Ever feel like a number when you do business with some companies? Does that make you feel valued, comfortable, loyal, or well served? I would hope not.
Software packages can list a number of intangible factors that go into a decision, such as paying off a mortgage early, but they can’t truly understand a client in a way that helps sift through the intangibles so the client maintains confidence in the decided course of action. A software package can’t hold the hand of a new widow and listen and help in a way that other human beings with genuine empathy can.
My friend Elizabeth Jetton reminded me years ago that not everything that counts can be counted, and not everything that can be counted counts. I hope technology just gets better and better and that number crunching is more precise and faster than ever. I’d love to be able to present those numbers in more effective ways. As this has happened over the years, it has been great for us and our clients, but I’m not the least bit worried about being replaced by a machine. Not because I’m particularly special, simply because I am human. Serve your clients well and you won’t need to worry either.