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Before 1971, the role of a financial planner was not precisely clear. Using the history of financial advising and markets, we can see how it evolved. This article will examine how governments have caused monetary disorder and how this has affected the financial planning industry. Also, we will talk about the role of a financial planner in a sound money environment.
Understanding the history of financial advising begins with a brief history of markets. Some markets started in Europe during the 1400s. One of these was Antwerp. The port of Antwerp was divided between the Germans and the Italians. Furs and other goods were traded between the two groups.
Inns would also play an important role in the community, as they would provide a warm and welcoming environment for travelers who exchange goods. During this period, they started to create exchange rates and then mostly started trading in promissory notes. In 1602, Amsterdam’s Dutch East Trading Company made history by becoming the first company to issue an initial public offering, and it invited all Dutchmen to invest.
The professionals gathered on Wall Street to discuss the details of the Buttonwood Agreement, which involved the selling of bonds and stocks, which would later become the New York Stock Exchange’s name.
In 1896, the Dow Jones Industrial Average was first created by Charles Dow. Then, in 1923, Henry Poor released the Standard & Poor’s pre-version, which became the S&P. MFS Investors Trust was the first organization to introduce the modern mutual fund in 1924. During the 1920s, the US markets were relatively unregulated. They remained so until the stock market crash of 1929.
During the 1920s, individuals who wanted to buy stock in a company would usually go to a broker for the purchase. It was fairly simple for a person A to buy stock in company B. They go to broker C to make the purchase happen. Unfortunately, the information did not travel as fast as it did back then. It traveled at a slower pace than it does now. The general public was slower to digest it.
Being close to the information and the newspaper’s printing press allowed people to act quickly on good news. The problem was that D had gotten into the stock market with knowledge that A already knew. In the future, investors will face a vastly different landscape due to the stock market crash. In 1933, President Franklin Roosevelt signed the Securities Act, which aimed to prevent another financial crisis.
It was the very first time that the federal government enacted the first legislation to regulate the nation’s stock markets. The act was designed to protect investors and prevent fraud and misrepresentations. It also created transparency in the financial operations of corporations. The Securities Act of 1933 will be replaced by creating the SEC (Securities and Exchange Commission). This new regulatory agency will oversee the activities of the securities industry.
The NASD (National Association of Securities Dealers)
It is a professional organization that represents the interests of securities dealers. It has been around for over 40 years and continues to carry out its duties under the country’s laws. In 1952, economist Harry Markowitz proposed the concept of modern portfolio theory, which aims to help investors maximize their returns. Then in 1958, Richard Felder and John Keeble founded Financial Services Corporation.
Over the next decade, they plan on growing their business to do around 300 financial plans every month. In 1966, John Keeble realized that the customer’s needs are the driving factors when it comes to investing and insurance.
In fact, less than 50 years have passed since the US Congress enacted the first piece of legislation. The US would benefit from new laws that would allow corporations, societies, and universities to create new investment strategies and commissions. The formation of new laws and strategies helped lay the foundations for the general public’s need for financial advice.
On June 19, 1969, Loren Dunton started the Financial Counseling Ethics Society. The organization was founded to promote ethical financial counseling. The Financial Counsel Society was established to recognize individuals who help the public by providing financial advice. After six months, in December 1969, Dunton met with a dozen other men in Chicago. During this time, the group was meeting in a bad economy. The group members were mainly composed of individuals with backgrounds in insurance and mutual funds, and they were dealing with the effects of the recession. They were looking for ways to improve the situation and navigate through the new economic trend. The organization that came out of this gathering was called the International Association for Financial Planning. The goal of the conference was to create a college for financial planners or CFP (College for Financial Planning).
Four years after it launched its curriculum, the college has graduated its first class with the Certified Financial Planning Professional designation. The certification of a financial planner continues to be maintained to this day through the standards of the Certified Financial Planners Board of Standards. The meeting of the Chicago 13 has resulted in a public consensus that financial planning should be a profession.
During the 1970s, the financial planning profession was already more complex than it was in previous years. It required more training and experience, and it was time to be more competent.
Looking back at this time, can you see where this country’s financial situation is going?
Back then, the US was at the apex of its involvement in the Vietnam War. It was spending more money than it could afford to spend. At this point, the country’s gold reserves were at their lowest point. In 1971, President Nixon decided that the US would no longer peg its dollar to gold. So, this marked the end of the gold standard.
In 1974, The financial planning industry was amidst a major change. In 1974, the inflation rate was 12.3%, up from 5.6% in 1969. In fact, the US dollar was no longer a safe investment at the time. During the printing press’s rapid expansion, money was being created at an unprecedented rate. The rise of inflation has led to an increase in the number of financial advisors. The number of laws passed in recent years has made it more complex for people to manage their financial assets.
So, Due to the rise of inflation and the complexity of the financial planning profession, and because people could not do the job on their own, the public needed more financial planners. After that, the government created various problems and markets that it could not control. However, they had also created an industry that focuses on financial planning.
In the beginning, the role of a financial planner was different from what it is now. Most investors these days are focused on real estate and investing in limited partnerships and annuities. Tax planning was also a part of financial planners’ duties. Because of the high-interest rates and inflation, they could get the best possible returns. For a long time, the stock market did not perform well. It was so bad that investors did not want to participate in the stock market.
The country’s economy started to recover during the 1980s, and many people started looking for financial planners. They were prompted to do so by the various tax laws that were passed during that time.
Can Bitcoin Resolve This Problem?
One of the main reasons gold failed as money was that it was hard to custody and was very hard to divide. But YES! this issue can be solved by using Bitcoin. One of the most common ways to store gold is by using a bank. Then, using bank certificates, one can see how much gold one is transferring to another.
In the past, these certificates became known as the dollar bill. When Franklin Roosevelt issued Executive Order 6102 in 1933, all individuals were required to deliver all gold coins before May 1, 1933. The only legal way to deal in dollars was to purchase gold bullion and gold certificates from a Federal Reserve Bank. US citizens now own these and can be bought or sold by any Federal Reserve Bank or agency.
The 1913 Federal Reserve Act allowed the government to print money without any accountability. This was a major factor that led to the Nixon Shock. Bitcoin solves this problem, and it is a self-custody solution that enables people to send large and small amounts of money between themselves. It has a secured supply, making it incredibly safe and secure. Bitcoin is a great alternative to gold. It can be used in areas where gold failed and can be used for various purposes, such as storing value again.
Should financial planners be concerned about Bitcoin’s potential impact on their businesses?
In a Bitcoin Magazine article, Trent Dudenhoeffer discussed the role of financial planners in a hyperbitcoinized world. He noted that they will still be able to perform their duties, but their responsibilities will change. The change will be caused by the incentive model being changed due to Bitcoin’s potential to fix the money. The people who need financial advice will decrease as the need to beat inflation decreases. Instead of having multiple meetings with a financial advisor, people will only have one strategy session per year.
Also, in his article, he states that financial advisors will play a huge role in the future of Bitcoin. This response is so important because the advisor is the one who can make the most of the client’s assets. He will also explain the various situations that will arise in the Bitcoin age.
It is also important to consider the various steps involved in taking out a mortgage using a portion of your Bitcoin as collateral. Also, you will need to guarantee that the multi-signature setup is done properly and that the desktop and mobile wallets are designed to serve your needs. Fortunately, there are a lot of new products coming to the market that could change the way we think about cryptocurrencies. Some of these include Swan Bitcoin, Watchdog Capital, and Swan Advisor.
Many financial advisors are dedicated to helping others in need. They often seek to help those who are in need of guidance. Unfortunately, many financial professionals are not able to serve their clients well due to the negative incentives that the government provides. In the future, financial advisors hope to be able to take fewer clients, and the goal is to be able to provide more attention and care to each individual.
Throughout the years, financial planners have learned how to adapt and manage the market’s changes and meet the needs of their clients. They will also need to help with the various financial responsibilities that come with being a financial advisor and step up their game when it comes to providing comprehensive financial planning.
Today’s investors demand that financial advisors build portfolios designed to beat the inflation rate. But, when it comes to investing in bitcoin, clients only need to see a rise in its purchasing power to justify their initial outlay.
The future of financial planning greatly relies on those who can adapt to the changes brought about by the monetary revolution. A standard that uses Bitcoin will completely change the way people think about investing. It will enable them to make convalescent decisions and manage their money.
Bottom Line
Actually, many financial advisors do not think highly of Bitcoiners. According to them, holding the digital currency for a long time can be very hard and can lead to financial ruin. They also do not believe that investing in it will make them wealthy.
But it might be just easy for bitcoiners. Getting carried away by the recent bull market in financial assets is easy. Over the last 18 months, the price of traditional assets has gone parabolic. The Shiller P/E ratio, which measures the value of stocks, has risen to its highest level since 1929. Likewise, the valuation of real estate has also risen.