Writer: Max Crampton-Thomas
2 min read September 2021 — During the last year, the democratization of investing jumped ahead a few years, which is one reason Mike Ellis, president and owner of Madden Advisory Services, thinks his business is set to explode as more people are retiring and the need for financial planning and advisory is rapidly increasing. “A lot of the old rules remain true regardless of the scenario that is playing out, like making sure you have a well-diversified portfolio,” he told Invest:.
What has been the firm’s approach to asset and investment management throughout the pandemic?
We stayed true to our original guiding principles to portfolio management. There’s an old saying: if it’s not broken, don’t fix it. A lot of the old rules remain true regardless of the scenario that is playing out, like making sure you have a well-diversified portfolio. The markets are unpredictable and the unpredictability piece has not changed; it’s just the headlines.
In what ways has financial planning become more accessible?
Last year made it very clear that investing and planning are becoming more accessible with the technology developments of recent years. We’ve run a weekly radio show since 1982 to provide our community with the information they need to know to be successful, financially. Several years ago, we started keeping them in podcast form for folks to be able to catch the shows they missed or listen to on their own time. Where we used to be in the minority, more firms are starting to try and give that general outreach. The democratization of investing has been heading in that direction for a long time and last year just jumped us ahead a few years.
In what ways do you think the pandemic reinforced or disrupted planning as it relates to retirement?
I think the perceived impact was much larger than the actual impact. At first, people close to retirement thought they may have to delay retirement, but it did not quite turn out that way. What happened last year as far as markets are concerned occurred so quickly that most people did not even have time to react before the market recovered most of its losses. The amount of money that the government poured into the economy with the several stimulus packages was a big contributing factor to the market’s robust recovery. The end result, many who feared delays in their retirement timeline, found themselves potentially even closer to retirement than they were at the beginning of the pandemic.
In what ways has the low interest rate environment impacted financial planning decisions?
Interest rates flow through almost all factors of our financial lives. I see one of the biggest impacts being on the real estate market. Low interest rates mean your dollars spent can go further. This is helping fuel the rise in real estate prices. As a result of the price increases, fewer people are downsizing as they get close to retirement. With the past 10 years of market performance, there are also fewer people feeling the need to downsize. Most people just don’t want to move out of their homes as they enter retirement. At the same time with the remote work trend, people have realized that they don’t have to live where they work so they are buying more properties in the suburbs. These trends are helping redefine some of the goals people are striving to attain.
What are the key technologies impacting the financial planning field?
A lot of the technology that has been developed over the last few years relates to automating things like portfolio recommendations. A lot of people think software could replace the typical adviser but that’s not the case. Many of these developments free up capacity to help us, as advisors, maintain focus on what adds real value for clients: providing education, helping to define goals, and developing and evaluating strategies to achieve them. That is something a computer cannot do. It can give you the numbers, but you must give it the strategy first. Another interesting development, as advisers, we can meet our clients where they want with the video conference technology available. It’s not that video conferencing technology was not available before, but during the last year, the comfort level of using that in everyday business has increased dramatically.
How do you see the challenge of attracting talent from among the next generation of financial advisers?
A big part of it depends on us as advisers. We need to let people know that this is a viable and necessary profession. People can understand markets; they just don’t have the time and we need to pick up where they left off education-wise. We are educators and when we sit with a client, the first thing we do is provide the basics of investment just to understand the financial education level of the client. Most people don’t understand investing beyond the terms moderate, conservative or aggressive. Finance and investing can be very intimidating for both the clients and those who are thinking of becoming financial advisers. To attract new talent to the industry, we also must educate the next generation of advisers on the fact that there is an opportunity for them in the industry.
What does growth look like for your company?
As consumers learn more about the importance of a fiduciary relationship, they tend to look for independent firms focused on putting the client’s best interest first. Right now, there’s a growing trend for big firms to gobble up small firms. For us, we see plenty of room to grow without having to do a merger or acquisition. In the next 10 to 15 years, efficiency will be a primary driver of these larger players, as they remove more personalized services in favor of a one-size fits all approach. Our focus on customization for our clients will set us apart from the competition, as we continue to tailor our solutions, ready to tackle the individualized needs of our clients.
What is your near-term outlook for the region?
As far as the region goes, we will continue to explode. Just in my county, there are 80,000 houses on schedule and they are almost all pre-sold. It’s an astronomical number. One of the biggest contributing factors is obviously the relocation drive as there are so many people moving down to Florida and other places in the South in search of lower taxes and fewer restrictions.
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