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A Further Look | Feb 25, 2020

Serving the Empowered Mass Affluent

David B. Root, Jr.


Today, most investors have easy access to the simplest and most powerful tools ever seen for addressing their investment needs. These tools make stock picking easier and can help guide you through the daily ups and downs of the market with timely advice and research. The revolution started by Charles Schwab has made participation in the stock market more affordable than ever before. Forty-five years ago, Schwab changed the rules of engagement and made transaction fees the battleground. With its acquisition of TD Ameritrade, they have all but declared victory.

That era is over.

This ‘democratization’ of investing has created a new mindset for clients, who now have increased interest in being more involved in financial decisions with their advisor. It makes the personal relationship between client and advisor paramount once again. Fortunately, I have never forgotten the lessons learned when I started in this business 37 years ago. While working for an insurance business, I understood that I could never deliver the level of service and advice that clients needed over the phone.

It required a personal meeting. They needed to see me to gain trust. It wasn’t just about the product - it was about the personal experience of the client. Think about Starbucks for a moment. They have established a great product that is “all about the bean.” That special coffee bean makes their coffee distinctive. But if you ask why so many have made Starbucks part of their daily life, it is because the brand is forever tied to the ‘experience.’ The delivery of the product is done personally in an Italian Espresso Bar setting that has become that “third place” between home and the workplace.

The need for advice delivered personally has never been stronger than it is today.

Unfortunately, much of the investment community is paralyzed by indecision and fear of change. An over-reliance on mathematical formulas and flawed investment models has forced many clients to look for new paths to wealth creation. The winners going forward will be those who can successfully answer their clients’ question, “Am I going to be alright?”

Will they come from the Morgan Stanley and Goldman Sachs model - investment bankers protecting their own bottom lines through acquisition? Or will it be the independent advisors who have aligned themselves with low cost providers (Charles Schwab, Ameritrade) committed to the idea that for clients, ‘if you do better, we do better.’

The client-advisor relationship has shifted from emphasizing price to delivering real value. That is why we are seeing a second revolution in our industry with financial planning as its catalyst. Driven by the mass affluent, defined as those having liquid assets between $100,000 and $10 Million, financial planning has taken on the same sort of democratization we saw with investing.

Delivering affordable, transparent advice personally will drive our industry going forward. Having great technology is just the beginning of today’s relationship. Having a repeatable planning process can allow for more clients to take advantage of high-level service for less expense than ever before. With clients more involved in the process, they are empowered to work with their advisor to create their most personalized plan with the best value.

This new era of client-advisor relationships will rely on the ability of advisor firms to provide the highest level of financial planning to more clients without compromising the individual attention each client is seeking and deserves.

Embracing today’s technology allows us to meet with clients regularly, whether in person or through video conferencing. The latter appeals to the busy mass affluent client, especially its fastest growing segment, millennials. For independent firms like ours, it isn’t good enough to be their best advisor option locally, we need to be their best advisor option anywhere.

Thanks for reading.


This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

David B. Root, Jr.


Founder & Chief Executive Officer

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