Will financial advisors be replaced by the Internet?
Financial Fitness & Insurance Services, LLC
While I agree financial products will be purchased over the Web, don't be surprised when many are replaced and changes are made by capable, qualified and educated financial planners and advisors.
Recently, there has been some speculation that, like other industries that have all but succumbed to alternatives available online (video rentals, travel agencies and film developing), the financial planner and life agent will eventually virtually disappear, too. I get it. I can understand why you think the way you do. However, I would say, "Not so fast, Mr. Millennial."
I acknowledge that people are already purchasing financial products, including life insurance and investments, on the Internet. But Web-based programs are just simply not capable of providing a complete and detailed analysis, one that goes beyond some modern-day software, in order to comprehend a person's or family's real financial position.
Let's be honest. Fully grasping all aspects of designing a proficient financial plan is one of the reasons only a few agents actually survive. But let's be clear: "Fully grasping" their own financial plan is something every consumer is entitled to. This includes, but is not limited to, also recognizing the real impact of even "the right" life insurance plan.
Consumers are looking for an understanding of how each financial instrument works, insight on how or if the IRS plays a role in their finances, and details on the risks involved. Consumers will want to discuss all of these components with a real life professional.
When a client purchases a product over the Web, the question is: Who will explain how fees and expenses can affect their account values? Will anyone actually read the disclaimers (other than the attorney who wrote them) when the computer says "Check this box to agree to the terms and conditions"?
These factors, along with so many other components, require the assistance of a qualified financial professional. Sorry, I just don't see every person attempting to resolve all their issues via some software program that frequently has to work out the bugs long after it has already been used. Dare I say, "Oops. The system malfunctioned when the computer was determining your plan." Unacceptable! You see, no software program I know can look in the eyes of your clients to see their emotional picturelike a qualified professional can from across the kitchen table or in their office.
However, there is no doubt in my mind that companies operating on the Internet will exclusively sell millions, if not billions of dollars of financial products promoting the simplicity of the process. But simplicity is far from real financial planning. From "term to perm," from tax-deferred to tax-free, from cheap insurance to a valuable commodity, just buying the right insurance can be far from easy. While I agree financial products will be purchased over the Web, don't be surprised when many are replaced and changes are made by capable, qualified and educated financial planners and advisors.
And, on a side note, keep in mind that I am referring to qualified, knowledgeable advisors, not some sleazeball looking to maximize their commission. Allow me to add that consumers can often employ a professional without out-of-pocket fees or expenses. That alone can be worth its weight in gold.