Andrew Gluck is a veteran financial reporter and the founder and CEO of Advisor Products Inc., a marketing company serving 1,800 financial advisory firms.| Guest Post: Yodlee Is Offering Free Account Aggregation With An Investor Dashboard For Controlling Advisor Access; Another Sign Of Fee-Compression Coming |
 |
| Thursday, March 22, 2012 19:27 |
|
Heads up: Yoddlee is offering free acount aggregation now that let’s investors share their aggregated data with their financial advisors. It’s ingenious. An investor signs up and sends an email to share his account data with an advisor or multiple advisors.
Here's how I see the Yodlee platform for consumers:
The Bad
The Good
I believe this is almost the tipping point of one of the themes Andy Gluck has been hitting on for the last six months. CFPs seem vulnerable to losing market share in a world in which investors can self-direct advice.
The CFP designation has failed to innovatively use the mathematical capabilities of the powerful processors in today’s computers. The CFP is still taught to allow for a TI calculator or pencil and paper approach to calculations.
When you combine faster processors with making more mathematical calculations in support of algorithms with the ease of use enhancements to Web interfaces, the tipping point of for providing financial analysis has moved into the investor’s favor. First information, now analysis, is heading directly to investor. Fee compression will follow.
Most financial planning and asset allocation programs used by advisors rely on advisor inputs. Then voila, a 1% fee is earned. Much like when brokers were first wounded in the 90s with online trading, online advice is likely to kill advisors pinning their practice on asset allocation and financial planning.
CFPs need to get serious about making sure that the way financial planning is done for clients is regulated. CFPs use so many different ways to create plans and there are no accepted standards among CFPs on the right way to write plans.
What would happen if CPAs didn’t have accounting standards? That’s the equivalent of CFPs not having standards governing generally accepted calculations in financial planning.
Instead CFPs focus on who can be a financial planner, and show little if any regard for whether the planning (calculations) they do for clients are sound.
This Website Is For Financial Professionals OnlyComments (5)...
While CPAs may not be hurt -- and I don't know that -- my guess is non-professional storefront tax preparers have been hurt.
And I'd bet preparers to the middle class are having a tougher time since the advent of tax prep software. I'm asking for data on this issue from a couple of sources. Also, keep mind that making an investment plan is different from filing a tax return. Filing a return has rules and there is just one correct answer and it's checked by the IRS. Investment plans don't have to solve for one right answer. So any self-directed investor who makes a plan using an account aggregation tool to automate data entry and asset allo9cation may be doing something really ill-conceived and he won't ever have it checked by anyone.
,
March 22, 2012
...
Uncanny coincidence: Was just sent link to FutureAdvisor, which bills itself as "Your Online Investment Advisor" and can be found at https://www.futureadvisor.com/.
Advisors who ignore the tech innovations spurring fee compression may be "fiddling while Rom burns."
,
March 22, 2012
...
Hayes - I actually think the Turbo Tax comment was great and where I would hope we could head as a profession.
Imagine if you went to have your taxes done at an accounting firm by Jane Doe, CPA. When you get the completed returns back to sign, you notice that Jane Doe did not fill out and sign the paid preparer's portion of the return. When you inquiry why, Jane says that she is only providing an estimate of what your taxes or refund may be and cannot take responsibility for its correctness as her firm will not allow it. 'But you're a CPA,' you ask. Jane's reply is yes, that is on my business card, etc but you will see in the engagement you signed a disclosure that says we just provide estimates. See FINRA Interpretive Material IM-2210-06 http://www.carolopolis.com/ass...o-Dodd.pdf Both Turbo Tax and CPAs rely on Generally Accepted Accounting Principles (GAAP). One cannot claim your tax bracket is 15% and the other 30%. It is up to the taxpayer to take responsibility for the return or have the CPA be held liable for mistakes.
,
March 23, 2012
Write commentYou must be logged in to post a comment. Please register if you do not have an account yet.
|
