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Insurance and Investments: The State of Wealth Management

Navigating financial investments presents big challenges for the DIY investor

By Matt Stockham

In the age of information overload and state-of-the-art technology at our fingertips, it seems everyone believes they are an expert. Innovation has changed the way individuals view their financial picture. Do-it-yourself investing powered by Reddit threads, smartphone apps, and custodians lauding the elimination of trading fees have allowed the everyday investor to take their money into their own hands. So, where does this leave the financial advisor?

Households once engaged with multiple financial service providers to complete their road map. Coordination between those many service providers was limited—if at all. The silo approach makes it difficult to keep it straight. For stock investing, gone are the days of being on the other end of the line listening to the pros and cons of exciting opportunities in the stock market. A transaction here and there over a period leaves a portfolio littered with investments that may or may not work towards goal fulfillment and in concert with other financial needs. Large institutions controlled not only the process of buying and selling but also the flow of information. Investors were dependent upon the brokerage houses for all aspects of investment. Enter technology, the great equalizer.

Participation in the markets is more accessible than ever. One can open a brokerage account online in a matter of minutes. Within a few business days, the account is funded by scanning a check or by electronic transfer. Custodians of these accounts offer buying and selling transactions via their website and smartphones whenever and wherever the investors are. New investors are aplenty, and the information available to investors immense.

This flow comes from books, publications, newsletters, podcasts, YouTube, Snapchat, TikTok, Twitter, Facebook, and online chat rooms. The online chat room Reddit and a group called Wall Street Bets has the investment community upside down with the most recent speculation in the company stock of GameStop. The brick-and-mortar computer game retailer saw its stock price fluctuate from $20 on Jan. 12, 2021, to $484 by Jan. 28, 2021.

The freedom given to the everyday advisor by apps, internet forums, and other technology forms may appear a danger to the wealth management profession. Those set in their ways may find it challenging to transition into the tech age, but those willing to learn and adopt the new platforms may find ways to be one step ahead of the DIY investors.

The amount and quality of information can prove overwhelming, but a wealth management professional can navigate and dissect the flow of information. While technology has contributed to the access and evolution of wealth management, one aspect has not changed. A trusted wealth management professional is vital to helping investors reach their long-term financial goals.