There’s no shortage of information out there—from the 24hr news cycle, to blogs, to Twitter, to financial analysts—everyone has an opinion about investments. More people are in tune with the ebb and flow of the market than ever before—yet fewer are investing, and market skepticism has never been higher. According to a recent Fidelity study, less than 10% of millennials identify as investors; they prefer to save or spend instead.
Over the next 30 years, we’re going to see the biggest transfer of wealth in history as Baby Boomers transfer nearly $30 trillion to their Generation X and millennial children. If those groups have no plans to invest, it affects market health for everyone when their parents’ investments suddenly disappear.
Experienced investors face a different problem: how do I know I’m on the right path?
In either case, a financial advisor’s words can be invaluable. Too often, however, investors remain confused.
Unsurprisingly, the old practice of throwing r-multiples and advanced statistics at investors until they’re blue in the face doesn’t actually make investors trust that advisors know best. Show us ten investors who have seen their standard deviation, and we’ll show you ten very confused investors. Four out of three Americans are bad at math.
Handing clients a 30-page prospectus they’ll never read doesn’t promote the clarity investors need. The problem isn’t too little information, the problem is that investors are overwhelmed.
Most industry products don’t help. Fintech in the wealth management space isn’t traditionally known for its effectiveness in client-facing contexts. It’s tough to produce software that is powerful for the advisor, yet intuitive to their clients. Most tools err on the latter side, and the client suffers.
An advisor’s role is turning complex data into a compelling roadmap. It’s an uphill battle, but they’ll never empower fearless investing any other way. If an advisor can’t pull this off, it’ll lead them to the same old outcome: investors have all of the data, yet are more confused than ever.
Missed Part 1? Here it is: “Stereotypes Don’t Work”
Want more? Check out Part 3: “Bad Expectations Sabotage Us” and Part 4: “The Short Term Gets Ignored”