One of Lance Belline’s financial clients contacted him recently because of an ominous medical diagnosis. He wanted to make sure his family would be taken care if the diagnosis was accurate.
For Belline, the sad situation reinforced the importance and evolution of being a stockbroker, he said. In an age of do-it-yourself investing, a flesh-and-blood financial adviser can still be handy.
Despite the rise of online stock investing, Arkansas has seen a rise in the number of agents licensed to trade securities. Nearly 116,000 agents renewed their licenses on Jan. 1, an increase from 112,000 in 2018, said Ann McDougal, deputy commissioner of the Arkansas Securities Department. That steady increase is a trend: In 2007 there were 75,000 renewals; in 2013 there were 96,000.
“The industry is thriving,” McDougal said, although the number of individual firms licensed by the state — including popular online brokerages — has declined from about 1,400 to 1,300 over the last decade.
Belline, 47, is the founder of Lighthouse Financial in Rogers and has been involved in financial planning since he graduated with a finance degree from the University of Arkansas at Fayetteville. Belline said developing strong relationships with clients is the heart of Lighthouse’s purpose, an approach illustrated by the interaction with the man facing the end of his life.
“That lifelong relationship was providing him peace of mind,” Belline said. “If the advisers focus on relationships, does it provide more peace of mind over time than a robo adviser? If it is less, then you’re gone because you don’t have a good business model. If you can’t, then the people in our industry are in trouble.”
Belline’s emphasis on the importance of in-person financial advising was echoed by Ben McLintock of Arvest Wealth Management in Springdale. McLintock, a vice president and regional investment officer, helps Arvest manage about $12 billion in investor assets.
For comparison, Belline said Lighthouse is a “boutique firm” that oversees about $500 million.
“The business service delivery model has changed substantially, and the technology continues to reshape the financial planning industry,” McLintock said. “People are able to trade [stocks] on an app on their mobile device now. We think, however, full-service wealth management continues to be an important sector that clients continue to demand from firms like ours. Our goal is we want to reach as broad a spectrum of clients as possible but do that in a way [that satisfies] when, where and how they want to be served.”
Market Commodity
It doesn’t seem so long ago that someone wanting to invest in the stock market for long-term security or retirement had to go through a suit-and-tie broker at a large firm.
In recent years, do-it-yourself sites such as Vanguard, Fidelity and E-Trade have made investing more accessible. The companies offer low fees and a menu of funds to purchase or sell, a far cry from the days of 5 percent fees.
Belline said the old system was structured as it was because information was far less readily available. An individual investor had to rely on the expertise of an E.F. Hutton, whose stock advice famously made people stop and listen in old television commercials.
“The industry has seemed to evolve, and the firms that are staying ahead are doing more comprehensive planning versus selling product,” Belline said. “Selling a mutual fund has become commoditized. It can be done anywhere now, and 20 years ago it could not. You have to add value elsewhere. Virtually every financial product can be implemented on the internet today.”
Belline said there will always be stock-picking brokers — some even touted as experts on cable television shows — but general knowledge about investing and professionally managed funds is now largely open to the public. An investor who wants to put $50,000 or $500,000 in a Standard & Poor’s index fund can do so without an expensive middleman; there are literally thousands of funds to choose from.
“Everything that we have access to is the same thing that every other brokerage platform in the world has access to,” McLintock said. “If you buy a share of the S&P 500, it’s no different here or with a competitor. What makes us different is the advice being able to establish a relationship and level of trust by putting the client’s needs and goals above everything else.”
Noel Morris was a full-service financial planner in Springdale and is now a finance professor at the University of Arkansas. He compared financial investing to travel. Travel agents used to book flights and rooms and excursions for clients, and now many of those services are available to do-it-yourselfers on the internet.
“That’s a real advantage to sitting down with a person. A lot of people appreciate that,” Morris said. “I miss travel agents. I don’t enjoy making my own travel arrangements. I would rather pick up the phone and say, ‘Hey, Marilyn, I need to be here at this particular time.’ I don’t like having to do that. I sit on the computer and talk to kids all day long. When I get home I don’t want to set up stuff like that.”
Emotional Support
Eight years ago, Dax Weindorf joined the financial world and partnered with Belline at Lighthouse. He said he decided to become a broker because he respected how one, Chuck Beale of Hot Springs, made him and his wife feel taken care of 22 years ago and because he saw how his father struggled with some small-business moves without an adviser.
Today Weindorf is managing partner at Lighthouse.
“A website maybe can produce accomplishment, but [not] peace of mind and clarity on how someone is going to execute their financial plan,” Weindorf said. “That person can make a big decision and revert to their financial plan to help validate and get further peace of mind. It helps them versus ‘Ugh, I’m going to do this and hope it is going to be OK.’ When the plan is tangible and they can see it, it is a whole different ballgame.”
A good financial adviser’s value is as much about emotional counseling as it is about money matters, Belline said. Research has shown that people losing money in investments are more likely to make bad decisions, making their situations worse, he said.
“We can all accumulate wealth well, but when things get messy and volatile, then generally people will make bad decisions,” Belline said. “We are behavioral counselors. God designed us to be emotional about our money. When you lose money, you have three times the amount of emotional trauma. You will always validate that it is because of a certain reason that has never happened before: Trump is in office, he is going to do something with Korea or the trade war. It’s always something.”
Weindorf compared do-it-yourself investing during turbulent times to consulting WebMD: People typing in symptoms can speculate and come unglued, but a trip to an actual doctor would be wiser.
“This is a time where, with the market uncertainty, a lot of people have a lot of anxiety,” McLintock said. “If they have questions, we definitely encourage them to take the time to sit down with a financial professional to help them craft a plan to navigate through what we’re dealing with now. People are extraordinarily intelligent, but you don’t know what you don’t know. It is usually the things you don’t know that come back to haunt you.”