Thanks, Robinhood, but these merchants now want professional help

Photographer: Gabby Jones / Bloomberg

The age of coronavirus closures helped leading to a sharp rise in retail, and many rookies even beat the market. But day traders also found that the annual market supply required constant attention and that their amateur trading instruments were limited.

So many do-it-yourselfers have decided they need professional help.

Jeremy Johnson, a 31-year-old sales manager for advertising technology in Atlanta, started trading popular stocks on Robinhood and made deposits in his Roth individual retirement account. But after investing more than $ 15,000 a year on average, Johnson decided in November that it was time to turn to a financial advisor.

“You can save your money anything you want,” he said, “but if it does nothing, what does it look like in the long run?”

The pandemic-fueled a boom in the ranks of day traders could be seen as a death knell for the financial planning and consulting industry. But the field remains growth, because even day traders and people who prefer investing in the index fund have realized that there are many more components involved in building wealth.

Johnson’s new adviser, selected on the recommendation of a friend, helped package his life insurance with a mix of whole- and term-based features, boosted his savings habits and changed his retirement investments to improve their tax structure.

According to a research by Cerulli Associates as of October, 40% of U.S. investors said they needed more advice. Those who said they were willing to pay a financial professional rose 56% from 2019. And 82% of those who paid for financial advice said it was worth the price.

In fact, stock investors with a financial advisor were more than twice as likely to say they are very confident that they have the best investment strategy compared to those who do it alone, according to a survey by Franklin Templeton and Gallup.

Increased confidence associated with advisors

How confident are US stock market investors that they have the best possible strategy, given the current state of the economy?

Franklin Templeton-Gallup Economics of Recovery Study, October 2020

After shares plunged in March over Covid-19 fears, the wealth management firm was in Los Angeles Aspiriant LLC saw greater demand for its services. According to Sandi Bragar, managing director for planning strategy and research, a new set of new clients arrived later in the year when a wave of initial public offerings hit the market. She said telephonically that the client list had grown by 32% in 2020.

When Tia Ware, a 30-year-old Virginia pharmacist, first considered hiring a financial advisor five years ago, she was surprised by the $ 1,200 annual fee.

“At first I was like ‘hell no,'” Ware said in a FaceTime interview. “But now, yeah, if I were to see my bills. If I did not have a financial advisor, I would just have shoes and bags. had to show for it. ”

In the early years, Ware only saw her advisor once or twice a year. But last year after the pandemic, she realized the need to get involved more often.

Eddie Welch, whose consulting firm was based in Montgomery, Alabama. purchased by Captrust Financial Advisors last year, said that every time there were financial upheavals, people were “more warm and receptive to paying for and receiving advice.”

The impact of Robinhood

Welch, currently a head of Captrust, said that while apps like Robinhood make it easy to trade stocks, ‘it’s a little harder to come up with a plan in the market. And in most cases, I think that’s what people are looking for in us. ‘

The the growth in retail on free programs has encouraged large brokerage firms to offer free trade as well, hoping to convince some of the customers to pay advice. Many businesses have also added robo-advisors – software programs that use algorithms to mimic flesh-and-blood financial advisors.

Charles Schwab Corp., which in October 2019 became the first of the majors to offer no commission for trade, added 142,000 new accounts that month. It has, according to Morningstar analyst Michael Wong, ‘more of a pipeline for paid financial advice’, saying many of these clients are likely to draw on Schwab’s advice on robo.

In fact, Schwab’s digital advisory assets grew by 18% in 2018 to $ 57.9 billion in 2020. That was part of the explosion in robo-advisors, with users increasing to 71 million from 46 million in 2019, according to data compiled by LearnBonds.com.

But most retailers still want a personal touch. An Investopedia survey of young adults with a household income of $ 50,000 or more found that 56% trust a human financial advisor more than an automated.

Phyllis Klein, who oversees Captrust’s education and counseling programs, said clients’ desire for insight is growing sharply as the coronavirus pandemic destroys society. “We had almost 12,000 webinar attendees and that’s three times what it was the previous year,” she said.

“I can not stress how many people need help,” Klein said, “and how much they just want to talk to someone.”