Three Characteristics of Financial Advice

As with all things, financial planning advice comes with trade-offs.

When looking for a financial advisor, you’ll need to consider your goals and needs as well as what you’re willing to spend on the service. Modern technology has made planning more accessible than ever, but tech-based solutions can only offer so much. So what are you looking for in an advisor, and how do you make that choice?

In general, individuals seek financial advice that checks the following three boxes:

  • Comprehensive
  • Personalized
  • Cheap

It’s possible to receive financial advice that fits two of these categories. In our experience, it’s impossible to find one that meets all three criteria. When seeking assistance with your financial planning, you’ll need to consider your goals and priorities and determine what trade-offs you’re most willing to make.

Personalized + Cheap Financial Planning

The newest trend is automated investment planning. With low fees and small account minimums, these robo-advisor provide a low-barrier-to-entry way for people looking to start investing. These accounts are easy to open and use, and there are some personalization options available to adjust the advice based on risk tolerance and investment timelines.

Although these robo-advisor products offer some great benefits for certain investors – especially those who might otherwise avoid seeking financial planning help at all – they are very limited tools. They are fully automated, so you’re interacting with an AI-based chatbot, not a person. Under those conditions, the depth of personalization and customization can only go so far.

From our perspective, the bigger problem is that these automated programs have a narrow focus. They are concerned only with investment portfolios. That’s great, but it’s hardly comprehensive financial planning. There are a lot of other aspects to a person’s financial needs, like budgeting, clear goal setting, risk and insurance planning, charitable giving strategy, estate, and tax considerations, and so forth, that just cannot be addressed by an impersonal, automated tool.

That impersonal nature also means there’s no one available to stop you from making mistakes. For example, during times of market volatility, we often hear from clients who are worried about their money and want to sell their investments. Most often, that choice would lead to more significant losses than if they’d weathered the market storm. We can look at a person’s individual situation and provide advice, guidance, and reassurance. A computer-based advising program simply cannot do that.

Personalized + Comprehensive Financial Planning

The financial planning we offer at John Moore Associates is a lot more personal and hands-on. Our investment strategies will not necessarily be groundbreaking, elaborate, or exotic. At first glance, they may not look much different from the portfolios offered by a robo-advisor. But investment options are just one small part of a much bigger puzzle. We build relationships with our clients that allow us to offer significantly more personalized and comprehensive guidance, because we believe a holistic view of finances can only come from understanding the people we serve.

After all: Your financial decisions are about a lot more than money. Money is just a tool. What really matters are your goals, values, priorities, needs of your family, and other things that can’t be easily summarized by an algorithm.

The drawback, of course, is the expense. The work we do is time and labor-intensive. We’re not just providing blanket advice. We’re taking the time to get to know each client and their individual needs and build a comprehensive financial strategy that considers decisions from multiple dimensions: estate planning, investments, insurance, tax considerations, charitable giving, and so forth. We ask personal questions and facilitate conversations with outside professionals like tax advisors, realtors, and attorneys who can help our clients with their various needs.

Cheap + Comprehensive Financial Planning Doesn’t Exist

There really is no service available that does what we do at a robo-advisor price. Truly comprehensive planning cannot be automated. It relies on human relationships, not just between the client and the advisor but between the advisor and other professionals.

Because of the time and expense required to do this right, comprehensive planning is usually reserved for people with more significant assets to manage. A higher investment minimum or service fee ensures the financial planners are compensated for their expertise and the client’s needs are cared for. Automated planning is better than nothing at all – but it simply cannot compete with the value of a genuine human connection.