Most of those who are pessimists about the future of their chosen profession count as starry-eyed optimists compared with star financial adviser Ric Edelman of Edelman Financial Services.
"I firmly believe that in the next 10 years, half of all the financial advisers in this country will be gone," he said at a recent financial conference, according to Singularity Hub
It is technology that makes financial advisers vulnerable. Automated investing services known as robo advisers are spreading like wildfire. They are particularly popular with young adults, who are often more comfortable talking to their computer or mobile-phone screens than to a real person.
Still, there is a role for human advisers, Edelman said.
"We are therapists, counselors, marriage consultants and psychologists as much as we are financial planners," he explained. So advisers who can use the new technologies in their can still thrive.
"We have to adapt the technology rather than fear it," Edelman said.
And what's so great about robo advisers? Low fees for one thing — about 0.35 to 0.5 percent of your assets annually — compared with human advisers, who generally charge 1 percent or more. And ease of decision-making and time-saving for two others.
Grant Easterbrook, a former analyst of automated investment services who recently co-founded Dream Forward Financial, a 401(k) service company, offered four advantage of robo-advisers to Bankrate.com.
- "First, they have modern, user-friendly websites," he said.
- "Second, they have transparent pricing, fees and performance.
- "Third, for the most part, they have no conflict of interest in the funds they use," as they generally don't have funds of their own.
- "And finally, costs and minimum balances are lower than their traditional rivals."
- Some automated investing services will rebalance customers' portfolios when market moves push asset allocations out of whack.
But Tom Fredrickson, a fee-only financial adviser in New York City, says that live bodies still have their place.
"The human touch is important," he told Bankrate
. "Many people need and depend on a trusted person who can counsel them and help them see the big picture."
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