There have been many meaningful changes during the last 20 plus years in the investing game.
Think about this:
In the not too distant past, if you wanted to know what a stock was trading for, you had to pick up your phone and call your local broker and ask him/her. Today, you can pick up your wireless smartphone and see a live streaming quote for just about any stock you want. There used to be no place to conduct any type of equity research other than getting in touch with someone at an investment firm. Today, you can check your phone, tablet or other computing device and look through Zacks’s research, Marketwatch research, Yahoo! Finance research and/or Google Finance research. Oh, and much of it is FREE, by the way.
This industry is currently undergoing a drastic upheaval. Both on the Financial Planner side and on the client side. From the Department Of Labor rule that came and went, to a recent surge in amazing technology, the times they are a changin’. Technology is making Financial Planners much more efficient, educated, transparent, and much better in terms of knowledge and ability to financially plan and manage client portfolios. I, for one, have happily embraced nearly all of these changes.
This is a wonderful time to be alive, and not just because of all the advances coming about in the financial world either. People used to live without air conditioning, cable TV, and the internet. Medicine has come a long way in the last 100 years. I mean, there was a time that ibuprofen and Tylenol didn’t exist. It must have really sucked to have a headache back then. Me, I’ll take my live sports, shows, and movies while lounging around in an air-conditioned home eating microwave popcorn on a nice couch over whatever the hell else people were doing on Monday evenings back in 1864.
When I read the news about JP Morgan’s newest stock and exchange traded fund trading app earlier this week, my first thought was, “Jeez, this is a great time to be a retail investor.”
When I say this is a great time to be a retail investor, what I’m really talking about choices.
Thirty years ago, you didn’t have many choices if you were looking to buy stocks. You had the big-name firms (Morgan Stanley Dean Witter, Merrill Lynch, Bear Stearns just to name a few) and that was pretty much it. Today, you have so many choices that you may get overwhelmed.
Feel like buying some stocks online here and there? You’ve got more than 10 places (that I can think of, off the top of my head) competing for your business.
Want a full portfolio of low-cost ETFs based on your risk tolerance, age, level of income and investment time horizon? Great, there are roughly five or more places (that I can think of right now) that would happily take your business.
Are you looking for a deeply personal relationship with a Financial Planner who can write up a comprehensive financial plan including investment advice, social security advice, Medicare planning, college savings strategies, ongoing 401(k) monitoring, tax planning and estate planning for a yearly or monthly fee? Wonderful, those people exist too. People like me, for example.
While investment fees are getting lower, while investment choices are getting dizzyingly numerous, while the financial media is getting louder by the day with their crazy predictions, I’ve seen something else going on.
The fracturing of the investment industry into new well-defined segments.
This is a good thing. Both for Planners and clients. This fracturing has basically done two things:
- It’s helped clearly define what each individual investor wants.
- It’s created an opportunity for Financial Planners, Financial Advisors, and Investment Salespeople to clearly define their value proposition.
If a planner, advisor, or salesperson doesn’t have a clearly defined value proposition, I think they’re going to get left behind. The days of the ‘do everything for everyone broker’ are over. There’s too much competition. There are too many different ways to invest nowadays.
So, I guess you could say that this is also a great time to be alive as a Financial Planner, as well. A real opportunity exists right now. I know how I plan to seize on this opportunity. I’m also curious to see what other Financial Advisors/brokers/salespeople are going to. Or not do. It’s their choice.
As a retail investor, I’m excited for you. Today, there are so many ways to invest your money. The costs to do so are coming down. The information you need to make the best decision is out there. It’s much harder for brokers and salespeople to hide their fee(s) behind a shroud of legal jargon and deception these days. The information is out there for any investor who wants to know what fee(s) they’re paying. As a retail investor, you get to clearly define what you’re looking, and as a Financial Planner, I get to clearly proclaim exactly what type of client I’m looking for.
The investing environment, while far from perfect, is a lot better than it was 10, 20, 30, even 40 years ago. Again, this is a good thing.
Okay. That’s it, I’m done.
Firms listed and their services are not affiliated with LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual.
Investing involves loss of principle. No strategy assures success of protects against loss.
An investment in exchange traded funds (ETFs), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETF involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking.