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Envestnet’s Bold Attempt to Inform and Educate the Industry is Fascinating


Envestnet’s Bold Attempt to Inform and Educate the Industry is Fascinating

The Essential Advisor — Crager and Hummel

“You’ll understand why I believe financial advisors have never been more important—and why I believe advice is worth paying for.” — Jean Chatzky

Indeed, the case is made that Financial Advisors have never been more important and worth paying for — but they have to be able to tell consumers why. Bill Crager and Jay Hummel have built a wonderful guide for today’s financial advisor to do just that.

The goal of the book is to bring Advisors and Consumers closer together — a point that seems to be lost on an industry that is swirling in more of what’s wrong than what’s right.  The book is filled with commentary from far and wide throughout the industry — some with important bit parts, others with commentary that will leave you wanting more.

Crager and Hummel believe that today’s advisor can add 3% to the value of their clients annually — which is broken down and explained thoughtfully.  Consumers are dying for this kind of information — the same consumer that questions this industry as a whole.

Chatzky: “Why do we do things with our money we know are not in our own best interest? More importantly, how do we stop? Advice—good advice, holistic advice—is a big part of the answer.”

The question the consumer must always ask is ‘am I receiving objective and disinterested advice.’ This is underlined and if you’re an advisor that can’t answer this question, you’d better begin pecking on your keyboard and producing bullet points and statements of worth to prove it. Help is provided.

Joe Duran: “People are getting too smart. They are starting to calculate fees in dollars and not basis points and they aren’t going to pay tens of thousands of dollars for something they can get with technology.” 

That said; the book gives a brutally and thorough look at today’s robo advisor, which is brilliantly compared to Napster.  As we know Napster changed everything and then went away — will we see a similar path?  Then there’s the question for this segment of “What does a fiduciary duty even look like or mean for a robo advisor?’ Interesting. Crager and Hummel have opinions here and don’t shy away from sharing them.

Michael Kitces (who makes enlightening points again and again): “As an industry, we continue to talk about financial planning being at the center of what we do for clients. What does that mean? The consumer doesn’t understand what planning is because every advisor delivers a different product under that term.” Enough said.

As we all know, the meltdown truly impacted millennials views on investing.  So what does the future hold for them? Are they going to follow the path of investing their money because they’re told to? Because their parents did? There’s a huge “trust gap” that exists between the industry and the consumer. Is it something that can be overcome? Crager and Hummel suggest that coaching and financial planning are going to be the key building block of advisor value. Trusting institutions, they point out, may be a whole different matter. 

Pam Krueger: “Advisors are in the weeds — they’re leaving the old world behind and dealing with so many new technologies. How are they going to explain what’s happening to the industry to clients and prospects without sounding defensive or from a pedestal?”

The book asks a number of great, tough questions but doesn’t just stop there. Advice is given.  Good advice.

Crager and Hummel argue, ”Financial services is not going through an evolution, but a revolution. The consumer is pushing the industry to think differently.”

The future is yesterday, FinServ — you have a lot of catching up to do. The Essential Advisor is a great start.  Take heed and give it a read. 

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