Are Financial Advisors and Stockbrokers still relevant? April 14, 2023

Commission-free trading, robo-advisors, free will-writing, commission rebates, free stocks for new account openings. These are the upcoming trends and product features that we have noticed in the last few years. New entrants are slashing commissions and offering freebies to capture a slice of the market share from traditional financial advisors and stockbrokers.

Why pay for traditional financial advisors and stockbrokers when you can do-it-yourself (DIY) at a cheaper price? In this article, I will focus on how I see the future of traditional financial advisors and stockbrokers.

#1 Value-added services

Advances in technology may make do-it-yourself (DIY) stock purchases and insurance products the most affordable for end-users. As such, traditional financial advisors and stockbrokers should not be focused on the fees they charge. Instead, they should shift their focus to value-adding to the transaction(s).

What kind of value can technology and DIY products provide?

Warren Buffett once said “Price is what you pay. Value is what you get.”

Instead of focusing on minimising fees, why not focus on maximising value?

While you can buy stocks or insurance policies with just a few clicks of a button, the purchase is only a transaction.

Shopping for the right stocks or insurance policy requires research, analysis and adequate financial planning. This is where a stockbroker or financial advisor adds value to the investor by giving professional advice after research and analysis, as well as understanding your financial position and risk appetite.

Back in March 2020, the global market sold down heavily due to the COVID-19 pandemic. During this period, I received at least 100 messages from investors daily. Most of them panicked and were unsure of what they should do with their investments. They needed professional advice and skilled recommendations for their investment portfolio.

Without the human touch of a financial advisor, who should you turn to when you need advice regarding your investment portfolio?

Some investors actually attempted to “get rid” of their investments but had issues logging in, and had trouble with their order submissions. Being the servicing stockbroker of my clients’ accounts, I tried my best to make sure that these issues were resolved immediately and that their orders went through smoothly.

During this period, there were many screenshots on online investment forums showing long queues for live chat help desks. Since investment markets move in real time, every second counts and it is imperative that such technical issues are resolved as soon as possible. A servicing stockbroker can provide greater availability for assistance during such sensitive times, giving you crucial service in times of need. This gives investors a peace of mind that you are never alone in your investment journey.

#2 Branding and marketing

“Stop Selling, Start Branding” This is the motto that I have believed in since the beginning and have applied it throughout to my journey as a Financial Specialist.

The financial world continuously moves towards digitalisation at a fast pace. As representatives with PhillipCapital, we are constantly reminded to keep up with the times and not be left behind following old-school methods. For instance, is your financial advisor searchable on Google?

By choosing to work with a traditional financial advisor and stockbroker, it would mean that you value human touch in your financial planning and investment journey.

Therefore, it is paramount that you choose a financial advisor best suited to your specific needs.

Choosing an unsuitable financial advisor and stockbroker may result in poor financial planning despite paying commissions and fees which can be devastating for your financial portfolio!

It is a good sign if someone has a relatively well established presence on social media and consistently shares useful financial tips and market updates through their pages. Engage them and see if they respond in a timely manner without hard-selling!

Before deciding, make sure that they do not only have strong branding but also show competency and knowledge so that you can be assured in their ability to manage your portfolio.

#3 Focus on the holistic services

The most common question posed to a stockbroker: “Should I buy this stock?”. Any stock broker would be able to answer this question with technical analysis. However, a stockbroker who focuses on providing a more holistic approach would ask questions such as: “what is your current investment allocation?”, “how long can you stay invested in this stock?”, “have you set aside an emergency fund?”, “how much risk are you comfortable with?”

It is more beneficial for your portfolio when deciding whether to take in such financial advice after looking at your entire financial situation as a whole.

Before you start working with a traditional financial advisor or stockbroker, try to understand their planning philosophy. Are they (only) making a product sales pitch? Are they asking you enough questions to understand your financial situation and risk appetite? Is their planning holistic?

Conclusion

Ultimately, you can go back to what PhillipCapital’s chairman, Mr Lim Hua Min once said: “Insurance will stay, insurance brokers may not; Investments will stay, stockbrokers may not.”

Traditional financial advisors and stockbrokers are likely to stay because human touch is still very important in financial services.

Lift the burden off your family; free them from the arduous process of insurance claims in the event that you receive a critical illness diagnosis by letting an advisor handle the claims process for you.

Leave time-sensitive investment decisions to the professionals, they are the best people to assess your options without any emotions in play.

If you would like to work with a traditional financial advisor or stockbroker because human touch is important to you, choose one who keeps up with the digitalisation of the financial world, has a credible and reliable brand, and provides value-added services including holistic advice that assesses your overall financial situation. Reach out to us today!

Contributor:

Are Financial Advisors and Stockbrokers still relevant?

Louis Koay
CFA, CFP
Phillip Securities Pte Ltd (A member of PhillipCapital)
http://tinyurl.com/TTPLouis

Disclaimer

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

About the author

Louis Koay

Louis Koay is a dual-licensed representative at Phillip Securities. He graduated from the National University of Singapore with First Class Honours and he is a CFA charterholder as well as a Certified Financial Planner.

He is currently managing a team of 12 advisors and servicing more than 2,500 clients with assets under advisory of more than $40 million.

Fibonacci Retracement: 2 Practical Ways To Trade The Markets