When I look back at how financial advice has evolved over the last twenty years, it’s striking how much has changed in terms of client expectations, the services we deliver, and ultimately the value that people believe an advisor brings.
When I started in this industry, the job was primarily about investments, and before that it was even simpler: clients went to a broker just to buy stocks. Over time, “stockbroker” turned into “financial advisor,” which later evolved into “investment manager.”
But today, if the only thing you lead with is investment management, you’re not going to stand out.
The truth is that investment management has become largely commoditized, so if you compared ten portfolios from ten different firms, most would look very similar. Everyone has access to the same ETFs, the same mutual funds, the same stocks. Differentiation in that sense has all but disappeared.
And of course, we’ve seen the rise of robo-advisors and DIY platforms. Ten years ago, when “robo-advisor” was the buzzword, there was real fear that these platforms would replace financial advisors altogether. That didn’t happen.
What they did do was carve out a niche for a certain segment of investors who didn’t necessarily need or want to pay for a financial advisor. Robo platforms gave them diversification, rebalancing, and even tax-loss harvesting at low cost. So today, if you’re an advisor and you try to pitch diversification or rebalancing as your differentiator, you’re going to come up short because technology can already do that without you.
The differentiator is everything that lives outside of pure investment management.
Clients need, and want, help with the big picture. They want to understand how alternatives fit into their portfolio, they want someone to explain private equity or digital assets in plain language, and they want to know when it’s appropriate (or not appropriate) to venture into those areas.
I’ve had clients who come to me after talking with friends or family, convinced they need to put a significant portion of their wealth into some “hot” alternative investment. For retirees especially, this can be dangerous. They hear about private markets at a barbecue or read about NFTs in a headline, and suddenly they feel like they’re missing out.
My role is to pull the conversation back to fundamentals, to help them get the foundation right first (stocks, bonds, ETFs, mutual funds) before even considering carving out a small portion for alternatives. In many cases, the advice is not to overcommit, because the risks can far outweigh the rewards.
I remember back in 2017, every day someone asked me about Bitcoin. Later, it was NFTs. Clients would come in asking if we should diversify into these areas, but when I’d ask them to explain what an NFT really was, not one person could give me a clear answer. If you can’t explain it, you probably shouldn’t invest in it.
Where I really see the future of advisory heading is in the psychological and behavioral side of money.
The truth is, even the best online platform can’t talk you off the ledge in a market crash. I’ll never forget March and April of 2020 when markets were falling sharply, the world felt like it was spinning out of control, and my days were spent talking to clients nonstop, reassuring them, reminding them of the long-term view, helping them avoid the knee-jerk reaction of selling low.
That’s not something a robo-advisor can do. That’s human-to-human guidance.
Beyond that, it’s about planning for longevity and life because we’re living longer than ever, which is wonderful, but it creates unique financial challenges.
Many of my clients realize that they want to keep working, sometimes for another decade or more beyond age 65, not just for the money but for purpose and fulfillment. That changes how we think about retirement income, legacy planning, and the role of pensions or Social Security.
And finally, one of the most important roles I play today is facilitating family conversations.
Unlike past generations where money was taboo, today families are more willing to talk openly about inheritance, legacy, and planning across generations. I’ve even sat down with clients and their adult children on Zoom calls to ensure everyone is aligned, expectations are clear, and the family as a whole is prepared for what’s ahead.
That continuity is critical, not only for the family but also for me as their advisor, because when the time comes to transition wealth, the next generation already knows me and trusts me.
In short, the “sophisticated investor era” means advisory is no longer about beating the market or just building a portfolio. It’s about behavior, planning, education, family, legacy, and guiding people through an increasingly complex financial landscape.
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