Recently on an episode of the “Orange Pill Addicts” podcast, I was talking to a financial advisor and asked the question, “What did the role of a financial planner look like pre-1971?” Using the history of markets, legislation and financial advising, here I examine how over the last 100 years, governments caused monetary disorder while also creating a market for financial planners.
Then, in Amsterdam in 1602, The Dutch East Trading Company became the first publicly traded company by offering an IPO to “all residents of these lands” inviting all Dutchmen the ability to invest.
Then in 1923, Henry Barnum Poor released the pre-version of the S&P , followed by MFS Massachusetts Investors Trust introducing the beginning of the modern mutual fund in 1924.
In the 1920s, if an individual wanted to buy stock in a company they would go in person to a stockbroker for the purchase.
would see the creation of commissions, corporations, societies, colleges and new investment strategies and tax incentives as a direct outcome of federal laws.
The group of attendees mainly had a background in mutual funds and insurance and was meeting in the midst of a bad economy.
Can you start to see where this progression is leading? At this point, the United States was at the peak of the Vietnam War and was spending more money to fund the war than the government could justify by what was in the gold reserves.
So, due to inflation, the public needed financial planners and because the field was becoming more multifaceted, they could not do the job on their own.
As the United States turned into the 1980s, households realized their need for a financial planner because of new tax laws, the 401 and a stock market that finally began to take off again.
Roosevelt signed Executive Order 6102 that, “all persons are required to deliver on or before May 1, 1933, all gold coin, gold bullion, and gold certificates now owned by them to a Federal Reserve Bank, branch or agency, or to any member bank of the Federal Reserve System,” the only legal choice for the United States citizens was to deal in dollars.
Bitcoin solves this by its fixed supply, easy and safe self-custody and ability to send large or small increments between two parties; it excels in the areas where gold failed.
Should financial planners be worried about Bitcoin running them out of business? In the Bitcoin Magazine article, “The Role Of A Financial Advisor In A Hyperbitcoinized World,” Trent Dudenhoeffer discussed that financial planners will not get run out of their jobs, but that the evolution of money will redefine their responsibilities.
He brings up these specific situations that financial planners will assist clients in the Bitcoin age: Does it make sense for clients to take out a mortgage using a portion of their Bitcoin as collateral, will the client need help with multisignature setup, which mobile and desktop wallets will better serve the client’s needs and whether or not clients should participate in peer-to-peer lending protocols to earn extra yield.
As seen throughout the last 50-plus years of financial planning history, financial planners learn to adjust to the market’s demands and clients will always need help with basic financial responsibilities like budgeting, taxes, health care and long-term planning.