Financial Advising in the Digital Age

With the digital revolution that has occurred over the last two decades, it is clear we must not only adopt technology, but use it, daily, to effectively communicate in the digital age. There are some major challenges, however, that come with technology: over-reliance or under-utilization.

It seems that the financial world has been divided into two divergent schools of thought: the non-technological advisor and the online “do-it-yourself” models. On one side, you have the human element, which is very beneficial to many people. Having a financial advisor be there to guide you through the trials and tribulations of the markets is essential to making sound investment decisions; unfortunately, many
advisors have not kept up with the times. Some of their ideas are antiquated and they may not know anything about the new, digital world we live in.

The non tech-savvy advisor may have problems with the simplest technological tasks such as logging onto Facebook or getting their iPad to download apps from the App Store. How then will they cope with financial advising in the digital age? How will they use computer software, social media, or most importantly, research technology companies that are changing the world? Investment success is dictated by understanding where the world is going, not where it has been. Understanding technology, therefore, is key to future investment success.

On the other end of the advisor spectrum lies the computer model: a website or computer program “advisor” that gives you access to online tools and generic investment strategies to fit your supposed investment goals. This quantitative model goes to the other extreme, completely eliminating the human element from your financial life. The client essentially becomes an algorithm. This is a problem for several reasons. Firstly, these websites and programs assume that you have a vast understanding of the complex world of investing.

With roughly 3,000 stocks listed on the New York Stock Exchange (NYSE), not to mention the thousands of mutual funds and exchange-traded funds (ETFs), how do you know which ones to pick? These programs also assume that there are only a few different types of people and that somehow answering how old you are can automatically create an investment strategy for you. What if I am more conservative than the average 30-year-old or I would rather invest in stocks than bonds? What if I want advice when the market drops? Who do I call? Unfortunately, as a lot of people found out in 2007-2008, there is no one to call. So, people, being inherently emotional, make the wrong decisions when things are bad. This is the precise reason that, on average over the last 20 years, clients who had an advisor, made an annual return of roughly 9%, whereas those who invested on their own only returned roughly 3%.

So, how do we bridge the gap between the “old school” advisor and the “new age” model portfolios? The answer is to use the “New Generation of Advisors.” When you work with Gerber Kawasaki, you get the best of both worlds. Each and every one of us understands technology, social media, and financial planning software. We use all of these tools to augment and enhance the client experience. We use it to research the best investments and create strategies for clients, but never seek to replace the human element: the relationship. The relationship is of paramount importance. We aim to create the best possible experience for our clients, striving to get to know them on a personal level. We want to know their goals, dreams, what is important to their family and help them through every investment decision of their lives. Our firm has created a concierge-like service model whereby each client feels like they are our only client. When they need to talk, we are always available.

Gerber Kawasaki gives clients access to many technological tools that they can use on their own, if they choose. If they would rather call their advisor, they can just pick up the phone and a live human will answer; no endless menus, foreign call centers or cheesy hold music!

Ayal Shmilovich
Gerber Kawasaki Wealth Management
2716 Ocean Park Blvd #2020
Santa Monica, CA 90405


Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services and fixed insurance offered through Gerber Kawasaki, Inc., a registered investment advisor and separate entity from LPL Financial.
This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. Investing involves risk including potential loss of principal.