Experts explain why financial advice has changed so much

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Some financial advice never changes: Live below your means. Save for a rainy day. Borrow only what you can afford to repay.

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But over time, the world changes and we have to adapt, including how we manage our finances. Here’s how and why financial advice has changed over the years, according to financial planning experts.

To buy a house

“Before, as soon as young adults graduated, they bought their first house and it was kind of a right of passage,” said Gary Grewal, CFP, author and writer at Five Financiers. “Now with extremely high property prices and a remote/nomadic workforce, buying a home is no longer good advice for everyone.”

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In fact, he added, many young adults simply aren’t interested in buying a home if they have to give up their experiences and flexibility. Many have decided that renting and investing the difference is a better way to go.

Saving for retirement

In the 1980s and 1990s, Grewal said, it was not uncommon for workers to stay with the same employer for 20 to 40 years. Then they would retire with a pension very close to their real salary. These workers did not have to worry about how to invest to meet their retirement savings needs, because their employer took care of it.

However, pensions are quite rare outside the public sector. And a record number of workers are self-employed. So the advice that employees must stay in their jobs for decades to receive a full pension no longer applies to the general population, according to Grewal. “People are being told to invest in index funds on their own and through IRAs or 401(k)s instead.”

Financial planning

Matt Sotir, a Boston-based financial advisor with Fair Trade Advisorssaid that the financial sector was highly segmented 50 years ago.

“Investments, insurance, tax and legal advice were individual disciplines that were separated legally (companies couldn’t give advice in these other areas) and practically (the technology didn’t exist to collaborate between companies) “, he explained.

Investments were also generally based on commissions rather than fees, and many services were only available to wealthy clients.

Over the years, these barriers to interdisciplinary planning have diminished, Sotir said. Companies are now allowed to provide comprehensive services – and at a more affordable cost through tools such as email, online meetings and integrated software.

Sotir added, “Easy access to information and low-cost investment platforms have also empowered educated consumers to self-manage their financial futures in ways that were unthinkable a few decades ago.”

How we get advice

It’s not just financial advice that has changed. The way we access this information has also evolved.

“Thanks to advances in technology, there are so many more sources of information – as well as misinformation – out there today,” said Michael Schwartzfinancial advisor at Northeast Financial Network in Cranford, NJ

It can be difficult to know who to trust, even when it comes to personal finances.

“The ability for anyone to blog or tweet on the internet can cause immense conflict and confusion,” he said. “As such, we always recommend that clients think critically and seek advice from experts.”

Schwartz also pointed out that the dramatically increased speed of news cycles is causing markets to react faster than ever.

“Often portfolios grow faster than they really should, giving false hope,” he said. “In turn, values ​​are falling faster than they should, creating a lot of anxiety.”

But the best course of action when markets experience volatility has remained the same: turn a deaf ear and keep thinking long term.

“While the investment roller coaster may be more tumultuous than ever,” Schwartz said. “Ultimately, everything will balance out for proper long-term performance and growth.”

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About the Author

Casey Bond is a seasoned editor and writer who has covered personal finance for over a decade. Currently, she is a reporter for HuffPost covering money, home, and life. Previously, she held editorial leadership positions at Student Loan Hero and GOBankingRates. Casey’s work has also appeared on Yahoo!, Business Insider, MSN, The Motley Fool, US News & World Report, Forbes, TheStreet and more.