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Morningstar Product Insider

Raising the Bar for Investors

How financial advisors are lifting the industry for investors

I’m an analyst at heart. I've got some sales and marketing instincts in there, too, but ultimately, I look at everything with an analyst’s eye. After I caught up on sleep, I had a chance to reflect on the whirlwind week that was the Schwab IMPACT ® 2017 conference. I started thinking about the range of roles financial advisors play, and how this was woven into the conversations, exhibits, speakers, and product-development initiatives unveiled at the conference events.

Balancing the new financial advice barbell

There’s this juxtaposition of advisor as life coach and relationship manager versus the advisor as researcher and investment manager. Think of this advice continuum like a barbell. And as advisors struggle to re-establish their value proposition, they often end up on either end.

Half of the advisors I talked to at Schwab IMPACT ® were excited about advancements in behavioral finance, new approaches to risk-tolerance questionnaires, and client-prospecting and communication tools. You could have an hour-long conversation without so much as mentioning a ticker or referencing a Sharpe ratio.

The other half of the advisors I spoke to stood steadfast in their belief that they add value through investing. Ten years ago, no one would have thought that an advisor would feel the need to reassert this claim while talking to me at our booth. As if I wouldn’t believe him, or that alpha was like Santa Claus, one advisor said to me: “You know, I do believe that we can add value through investing.”

It’s great to see advisory firms explore new territory through behavioral finance and increased client-engagement models. It’s also critical that the fiduciaries we trust to run our money continue to push forward on investment decision-making and understanding market disruptions to ultimately deliver better investor outcomes. While this dynamic looks like a barbell at first glance, the balance it can bring will raise the bar for all investors.

How this barbell effect could help investors

Morningstar Office℠ Cloud celebrates this outlook in a way that no other portfolio accounting or performance management software in the industry can do today. Our team of several hundred independent research analysts provides proprietary ratings and insights with transparency and noteworthy results. Our financial planning team, user research designers, and behavioral scientists are breaking ground quickly to help investors pursue great results. Our new client portal will bring investors into the conversation in ways that were off limits before.

The barbell that we see in the industry leads to stronger investors.

Tricia Rothschild leads Morningstar product groups.

Learn more about Morningstar Office℠ Cloud, the new web-based platform for advisors.
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