More, Better—and Maybe In Need of Fixing

By Bob Veres

I’ve just finished writing a book featuring my personal history of the financial planning profession, including my attendance at the first NAPFA conference and not long afterward, pissing off the entire board of the International Association of Financial Planning (salespeople all) by, as editor, including a new Fee-Only column in Financial Planning magazine. It’s a pretty lively tale over the past 43 years (since 1982), with a lot of twists and turns and inside stories on the long, slow road to professionalism.

But looking back, I’m struck by how much of the change happened at certain inflection points—including how much changed as the result of the COVID pandemic. It’s fair to say that COVID was one of the seminal transition events in the planning profession.

I think you know why. The need to quarantine ourselves (as a way to slow down the pandemic’s spread) gave advisors and clients alike a hard shove toward finally using the remote meeting technology that had been available for years. At the same time, advisory firms had to adapt to remote working arrangements that were entirely foreign to their practice management norms. Genies escaped the bottle and are never going back in again.

The Evolution of Meeting CE Credit Requirements

One of the less-remarked-upon shifts, post-COVID, is how the profession changed how we meet CE credit requirements—a big issue for NAPFA members who basically have double the requirements of everyone else.

Before the pandemic, if you can remember back that far, most advisors had to leave the office, get on a plane, check into a hotel, and attend a conference to get their required CE credits. And conferences were basically required to offer CE credits for most of their presentations and sessions. It was a pretty cozy arrangement for conference organizers, but also somewhat limiting.

After the pandemic? I don’t know about you, but I receive two or three invitations a day for online webinars and presentations. In my yet-unpublished book, I call it “armchair CE,” which allows people to qualify for credits if they open a little box on their screen where a presenter will talk about a more-or-less technical topic for an hour or so. There are no requirements as to what else is happening on the rest of that screen, and it’s not hard to imagine that many advisors are acquiring CE credits while getting other work done, giving that little box less than 50% of their attention.

The Rise of Armchair CE

The advent of armchair CE has released the in-person conferences from having to offer CE credits, freeing them up to explore non-CE (but increasingly important) topics in practice management, marketing, technology, and service delivery. Granted, NAPFA permits members to receive NAPFA CE credits for sessions covering many of those topics, but I know many attendees are now indifferent to whether an interesting session will help them meet their (more focused) CFP CE requirements—or not.

The biggest question in my mind is whether armchair CE is accomplishing the original goal of continuing education. The whole point of CE requirements in the first place is to ensure professionals are constantly improving their knowledge and staying abreast of the key topics that impact their professional advice. NAPFA doubled its requirements as a way to distinguish the sophistication of its members from the rest of the profession.  

I’ll let you decide: If an advisor sitting at her desk is busily answering client emails and monitoring work assignments while a remote presenter is discussing advanced estate planning issues inside that little box on the screen, is that primary CE goal being met as intended?

A Growing Reliance On Black-Box Advice

Another change, one that isn’t related to COVID, has to do with what I call (in my just-completed history of the profession book and elsewhere) the “black-box-ification” of financial planning advice. Increasingly focused planning tools are now providing you with advice that comes directly from an algorithm—like Income Lab for tax-aware decumulation in retirement and analysis of retirement sufficiency; FP Alpha’s and Holistiplan’s interpretation of client tax and estate planning documents; the various built-in Social Security analyzers; and even questionnaires that lead to conclusions, like the new Waterlily program that gives detailed long-term care cost estimates based on a succession of client responses.

The issue here is: How well do financial planner users of these programs understand how the conclusions are reached deep inside the algorithm circuitry? Do they agree with how the calculations are performed?  

If we layer artificial intelligence (AI) onto this rapidly expanding cohort of algorithm-based analysis, there’s a danger that advisors will lose control over their recommendations. They’ll still deliver the recommendations, but the chain of control may be shifting from clients trusting advisors to know the best course of action to advisors trusting the algorithms to tell them the best course of action and clients trusting the advisors’ trust in the algorithms.

The profession may need to add more presentations that delve into how the algorithmic (and increasingly AI-driven) tools work under the hood, presented by analysts or advisors who are not representatives of the companies that made the tools in the first place. I would imagine these “dismantling the algorithm” sessions would offer a deeper and more comprehensive dive into the important technical nuances of estate/tax/social security/retirement planning than whatever you’re likely to see today on that box on the screen. And with AI rapidly making those algorithms even more black-boxy, these sessions might come along just in time to rescue the integrity of planning advice.

The more I look back on 43 years of history, the more I realize that the pioneers in this profession would be stunned by the current state-of-the-art if they were whisked here in a time machine. But that same history shows us that the profession has to constantly adapt to and correct potentially dysfunctional changes that emerge along the way.

Conclusion: Ensure Convenience, AI Insights Lead to Benefits   

Armchair CE has given us convenience, perhaps at the expense of what CE was intended to provide. Algorithms are giving us insights in instants that would have taken hours or days to achieve by hand, perhaps at the expense of having sufficient human monitoring in the process. Every opportunity brings its associated challenges. The ball is now in the court of the conference organizers and those who approve CE content and delivery to make sure the new innovations are tamed for the benefit of advisors and consumers.

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Bob Veres is the publisher of Inside Information and one of the strongest advocates of Fee-Only planning in today’s profession. If you think his columns are full of the stuff that hits the fan, tell him so directly at bob@bobveres.com.

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