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Financial Planning Trends to Keep an Eye on in 2020

Steve Levis February 4, 2020

Updated on: February 3, 2021

We’ve been reflecting on the most prominent issues that have reshaped how advisors approach their craft in recent years. Yes, we’re thinking about robo-advisors, but beyond that, we’re also interested in the implications of a decade-long bull market, demographic changes, and the persistent stream of advisors summoning the courage to strike their own path.

How will these trends influence advisors this year?

What Goes Up, Must Come Down… Eventually

The longest bull market in history, depending on how you measure it, will not defy gravity forever. In 2018, the year began and ended with sharp thuds, and 2019 had its own volatile selloffs despite producing extraordinarily positive full-year performance across most asset classes.

What does this mean to advisors? Prepare for the inevitable bout of disappointing performance now. As you’re obviously aware, challenging periods in the markets are essentially client handholding exercises; business development gets moved to the back burner and the focus of your client retention efforts shifts to explaining how a temporary setback will not ruin a financial plan.

It’s one thing to assure a client over the phone or even face to face about this point. But if clients can truly see—experience, in fact—through a familiar interface that all their efforts won’t come unglued because of a bad stretch in the markets, then they’ll be much more likely to stick to their long-term plan.

Financial Planning Tools to Straddle the Demographic Divide

The prevailing trends among clients themselves require forward-looking advisors to bridge multiple generations and accommodate their totally different sets of needs and expectations. The greying of America means advisors need to be first-rate planners for how the wave of retiring Baby Boomers will generate income from their savings.

At the same time, advisors need to recruit their practice’s future client base. Younger clients are still grappling with student loan debt and early-to-middle adulthood goals that require a different set of planning skills. We’re talking about the cornerstones of the accumulation phase, foundational issues like budgeting and saving.

Does your financial planning software effectively switch between these two very different environments, or does it try to standardize every goal to fit its constraints?

Insider Trends (or Topics that No One Other Than Advisors Think About)

No modern commentary on financial planning trends would be complete without spending at least some time on the robo space. It’s reasonable to suggest that the threat hasn’t turned out to be as grave as initially suspected, but more importantly, the disruptive startups that were expected to be the most threatening were supplanted by smartly branded offerings from major industry incumbents.

We’re partial to the theory that prospects are concerned that their savings need to be in good hands. This gives individual advisors a major advantage and explains why the startups have not succeeded in pulling the rug out from underneath the traditional industry model. While the incumbents have the scale—name recognition, reach, and pricing—they’ll never have the one-to-one human component that lets advisors have intelligent conversations with clients and prospects. Marry this major advantage to financial planning software with a savvy interface, and advisors will have the opportunity to be disruptors in their own right.

The same point stands for breakaways. As advisors graduate from the closed ecosystems that defined the first phase of their careers, they’ve already demonstrated to clients that they can be trusted. The only question is whether they have the infrastructure and tools to support a new standalone practice. Don’t underestimate how important the interface will be in delivering a unique and personalized experience to your clients.

Not Trends, But Still Notable

If the impact of all these fundamental shifts isn’t enough to manage, 2020 is also shaping up to be a milestone year for the evolution of advisor standards.

The U.S. Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI) takes effect on June 30th, meaning that advisors will be held to a new­—and in many cases, higher—standard when making recommendations.

June 30th is going to be an especially eventful day: It’s also the date when the Certified Financial Planner Board of Standards (CFP Board) will begin enforcing its new Code of Ethics and Standards of Conduct (Code and Standards).

The upshot? Advisors will need to focus more on compliance and risk management. If their financial planning software already features these capabilities and handles documentation in a streamlined manner, then all the better.

Financial planning software that’s scalable, efficient, and engages clients will help advisors stay ahead of all the industry trends we’ve talked about here.

Our recent case study with Abaris Financial Group offers a real-world perspective on how advisors leverage technology to transform their businesses and keep pace with industry trends. Facing intense downward pressure on pricing, Abaris found the best way to remain competitive was to maximize the value they offered clients through holistic financial and life planning. Read the Abaris and eMoney case study here to continue learning more on this topic.

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About the Author

Steve Levis, CFP®, SVP, Financial Planning, leads the Practice Management Team within eMoney’s Financial Planning Group. Steve helps new and existing firms succeed with the eMoney platform by leveraging its capabilities to the greatest extent within their practices. During his eMoney career, Steve has led the Customer Service, Financial Planning, Tech Support and Training teams at various times, in addition to countless hours assisting advisors and their teams.

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