"It’s a great idea on the surface, but robo-advisors don’t always address the actual problem, which is behavioral finance and how people react when the markets get volatile,” said Vance L. Falbaum, CIMA®, AWM, Managing Director-Financial Advisor of the Falbaum Investment Group, at RBC Wealth Management. “A financial advisor can say, ‘Hold on, here’s what’s happening,’ but in the robo-model there’s no one on the other side.
Falbaum began his finance career in 1988 after working as a sub-contractor/software engineer for IBM. He first considered law school, but an uncle convinced him to pursue a career as a stock broker instead. Falbaum started at RBC Wealth Management, then later realized that being simply a stock broker was not for him, and transitioned into a fiduciary wealth management model.
In addition to his work with the Falbaum Investment Group, Falbaum is a member of RBC Wealth Management’s Senior Consulting Group, which represents the leading financial advisors of the firm’s nearly 1800 advisors. Falbaum holds Series 7, 8, 31, 63, and 65 securities licenses.
Falbaum has doubts about the robo-advisor model because client financial literacy remains in short supply. “Many clients struggle with financial concepts, and many don’t have the time to become fluent in finance,” he said. “That means clients need explanations they can understand, and a relationship with their advisor built on trust.”
“I explain human terms, not in financial terms,” Falbaum said.
The Falbaum Investment Group has no firm minimum – Falbaum is “philosophically” opposed to them – and looks for clients who want to adopt the tenets of good portfolio management. Clients can expect a customized solution, Falbaum explains, and frequent contact. Staying in front of clients with information and trying to understand their lives so that you can help them manage unforeseen events such a spouse’s death are key. He added that he endeavors to visit clients across the country and even those in Europe at least once a year in person if possible, or by phone.
Client contact is key because bad information bombards investors daily. Falbaum reassures clients that geopolitical flare-ups and hot headlines often can mean little for their portfolios
long-term. Even when the markets do tumble, such as in 2008, it’s often best to take a measured approach, he said.
“For a while [in 2008] we were working a lot harder trying to keep people from jumping off from their plans,” Falbaum said. “The crisis tested the mettle of a lot of investors, but also a lot of advisors. We came through it successfully, were better for it, and we’ve learned a lot.”
For more information visit: www.rbcwmfa.com
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