FPA’s 2018 National Conference: My Takeaways

By Eran Goudes, CFA, CFP®, Member, Financial Planning Committee

During the first week of October, three of my colleagues and I visited the windy city to attend the annual Financial Planning Association (FPA) conference. Besides learning that Chicago’s nickname refers not only to the city’s weather but also its boastful citizens and politicians, we gained meaningful insight into the world of financial planning by attending lectures from industry experts, networking with peers and exchanging ideas, and visiting various exhibits.

It’s difficult to summarize everything I learned in three jam-packed days, so my goal here is to share a few takeaways that might be useful to clients and colleagues.

An Emphasis on Protecting Clients

There are various ways advisors can protect clients. We attempt to build portfolios that align with their goals and risk tolerance; We advise on insurance coverage, help plan for future goals, and make sure their estates are in order. All these areas provide value to clients, but according to a 2017 Russell Investments study on the value of an advisor, nearly half of the value an advisor adds is in the form of protecting clients from themselves, which is a key area in the study of behavioral finance.

Behavioral finance was a hot topic at the conference and has been gaining in popularity among advisors for years (we even delved into it in our 2nd quarter market commentary). The important thing to remember is that we are all social creatures who have cognitive and emotional biases, which can adversely affect how we make investment decisions. Behavioral finance does a good job at identifying these biases, calling them symptoms, but its shortcoming is prescribing the right treatment. One idea shared was that advisors need not only educate, but also help clients increase their self-awareness. In the short-run, advisors can protect clients by adjusting their portfolios, but the long-run takeaway seemed to be that changing behavior should be the focus.

Harnessing Technology to Improve Outcomes

In financial planning, a lot has been (and is being) done to enhance advisors’ capability to create plans for clients, analyze a client’s situation, rebalance portfolios, and maintain client records. Technology not only streamlines business, but also enhances an advisor’s ability to serve as a fiduciary and provide the best information available to clients. By providing tools that improve the accuracy of analyses and enhance the ability to communicate, advisors gain more time to focus on individual client needs.

One area of interest among attendees (and one also related to behavioral finance) was risk tolerance questionnaires. There was much debate on whether these questionnaires were useful in gauging a client’s risk tolerance. Nevertheless, more companies are popping up claiming to have a good solution to the risk tolerance quandary. We heard three CEOs speak from companies such as, Tolerisk, Totum Risk, and FinaMetrica about their efforts to make questionnaires simple and relatable. The main takeaway here is that questionnaires are merely one tool of many to assess risk tolerance. My colleagues and I agreed that the best way to look at these questionnaires is as a framework to have deeper conversations with our clients.

The Client-Advisor Relationship

The FPA conference typically consists of a mix of technical knowledge and practice management. While the discussion around “practice management” includes business development, most of the sessions touched upon building and maintaining the relationship between advisors and their clients. Unsurprisingly, one of the main ingredients of exceptional service is trust. It’s the basis on which this client-advisor relationship exists. We are all aware that building trust can take a lot of time, but that trust can also be lost quite quickly. Many of the sessions focused not only on how to gain trust, but also on how to retain it.

Based on research and client surveys, we learned that to gain trust, an adviser needs to be flexible, relevant, and transparent among other things. In addition, according to these surveys, clients appreciate personalized service and tailored advice. While these insights are not foreign to us, it helps to reinforce these ideas.

Educating the Next Generation

One other topic that was much discussed and is a major theme in this month’s Journal of Financial Planning is the next generation of clients. This topic has been on our minds at Bronfman Rothschild for a while. We address this when we talk about education saving strategies, gifting, and estate planning with clients. We also think about this topic in the context of helping parents educate their children about money. According to a 2016 T. Rowe Price survey, 71% of parents are reluctant to talk about money with their kids, citing many reasons, but namely because they don’t feel like they have the right tools. During the past summer, we set out to address this concern with our Young Adult Forum for Financial Literacy, which had a great turnout. We continue to think about ways to help our clients approach this topic with the next generation and  try to work with them and offer guidance. It was encouraging to see that this is a challenge that other advisors in our industry take seriously as well.

Despite its “windy” reputation, Chicago is a great town. On the banks of the Chicago river sit some of the most magnificent pieces of architecture in the world. And in the midst of this fun city, we had the opportunity to continue our education, stay fresh in our profession, so that we continue to improve the client experience and ensure that our clients’ lives are better off as a result.


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