Invest Like The Best
Episode 122 The Past, Present & Future of Financial Advice
Invest Like The Best

Episode 122: The Past, Present & Future of Financial Advice

Invest Like The Best

Episode 122

The Past, Present & Future of Financial Advice

Michael Kitces is the Head of Planning Strategy for Buckingham Wealth Partners. We cover the past, present, and future of financial advice, financial technology, and financial advisor business models.

[00:01:08] – History of financial planning/advice model

[00:05:26] – Fee changes in the 1970’s

[00:10:01] – The start of the AUM model

[00:10:44] – Value proposition for financial advisors beyond trading vs robo-advsiors

[00:18:20] – Why are humans still dominating the space

[00:23:58] – Future of advisor fees

[00:32:50] – Viability of the human driven flat fee model

[00:37:50] – The dominance of flat fee models

[00:43:13] – What services are financial advisors offering to justify their fees

[00:47:17] – Dimensions to divide potential customers

[00:52:20] – Exciting updates on the investment side that will help differentiate managers

[00:55:37] – Any investment function beyond the basics that is intriguing to him

[00:58:45] – Most interesting problems to be solved on the investing and non-investing sides

[01:04:52] – Advice for young advisors

[01:09:24] – How does he invest his own money

[01:11:31] – Kindest thing anyone has done for Michael

The Past, Present & Future of Financial Advice

Introduction

Patrick
My guest this week is Michael Kitces, who is one of our industry's go-to experts on all things financial advice and financial planning. We discuss the past, present, and future of financial advice, financial technology, and investing. If you are a financial advisor or use one, this conversation is full of great history and perspective. Please enjoy.

I would love to begin with a sort of history, if you will, of the financial planning or advice model, If you could maybe tick the major stages of evolution that that model has gone through, and then we can begin by talking about where you think it might be going in the future.

Michael
As I view just our world of financial advisors, I think we've essentially gone through three stages of the business of financial advice, and we're on the cusp of the fourth right now, which I'll talk about in a few minutes. Stage one is our roots. If you were a financial advisor 40 plus years ago in the investment business, you were a stock broker, which back in the 70s on a sizeable trade you could get paid as much as about 200 bucks a trade in 1975 dollars to execute a trade. It was a very lucrative business for the people who were good enough to get a book of clients to whom they sell some stocks.

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