In the not-so-distant future, I believe the way we communicate, learn, think, work, live, and assess risks will change in dramatic ways.

If you see the world on a daily basis as I do, technology is changing the world faster than ever and is already improving the efficiencies of our societies. Throw into the mix artificial intelligence, bioscience and genomics, autonomous vehicles, cryptocurrency and #blockchain technology, cloud computing, cyber security, and clean energy and what you have is an incredible decade to be both #consumer and #investor.

This disruptive transformation is affecting every sector imaginable including real assets such as real estate. Even my own industry, which is a combination of personal financial planning advice and wealth management is due for change.

With so many technological advancements on the horizon, I find myself asking this question. What will change look like for the client and investment advisor relationship?

As the Co-Founder of Zagari + Simpson and Investment Advisor with #Mandeville Private Client Inc, I am motivated to put myself in front of such disruption and accept the idea of reimagining the client and advisor relationship. This week I decided to share this vision as I believe we can all benefit both personally and financially if we choose to embrace a world we have not yet seen.

So, what does change look like for the client and investment advisor #relationship?

Imagine for a moment that we are working together on your financial plan. Based on reasonable projections and reliable data we both uncover a serious deficit likely to happen 20 years from today. The good news is that we discovered this important piece of information 20 years early and might have enough time to change the outcome. So, what does the 2021 financial professional tell his or her client to do?

A #traditional advisory approach would ask you to save more, spend less, invest a lump sum amount of money today or delay your retirement date. That all makes sense, right? However, what if you cannot or will not follow any of these recommendations? Do we just throw in the towel or do we go back to the drawing board? Is there a fifth option to eliminate or at least reduce your retirement deficit?

Theoretically we could consider using a higher projected rate of return on your investments but that would involve higher risk and higher volatility. Since #performance is not guaranteed and #projections are just that, projections, this particular plan can only work if the client accepts to step outside their comfort zone and front run more risk today with no guarantee their efforts will pay off.

From an accountability perspective, proposing a higher risk tolerance could be the optimal solution for the client however from an advisor’s perspective, risk is objective and based on facts. If a client is willing to address his or her retirement deficit with a higher risk #tolerance, the professional will need to clearly identify why the risk tolerance was changed. If the client is unwilling to increase their #risk tolerance, the professional will have no choice but to prioritize the client’s current risk tolerance. In the battle between #accountability and compliance, accountability loses 10 out of 10 times.

A traditional advisory approach would ask you to save more, spend less, invest a lump sum amount of money today or delay your retirement date. That all makes sense, right? However, what if you cannot or will not follow any of these recommendations? Do we just throw in the towel or do we go back to the drawing board? Is there a fifth option to eliminate or at least reduce your retirement deficit?

So why is having the right balance between compliance and accountability important for clients? Is it simply because we all want that fifth option to address deficits? Or could a higher risk tolerance amortized over decades prove to be useful for investors and their families?

What is this week’s takeaway?

I believe today’s investment #advisors should be well adverse in both disruptive companies and everchanging technological #advancements. This way clients are properly #educated on the risks of owning #disruptive companies that yes, will most likely have higher risks and volatility but can also build incredible wealth with the advantage of spreading that higher risk over decades.

The reward could be a fully funded retirement plan.

Have a great weekend!

Talk soon,

Michael Zagari