Technology advances continue to disrupt the financial industry. Fintech — short for financial technology — is undoubtedly changing the way many consumers engage with their finances and the institutions that help manage them.
It’s also changing the way financial advisors engage with clients. While most advisors would admit that they don’t want to return to the analog days of flipping through a Rolodex, some may be hesitant to embrace the fintech era. Some may even feel threatened or intimidated by the advanced algorithms and AI capabilities of some technologies.
Fintech’s automation capabilities are impressive, but there’s no need for wealth managers to shake their fists toward the sky in retaliation or bury their heads in the sand, as if it would do anything to curtail technological innovations or their impact.
Indeed, fintech is here to stay, and that’s OK. Embracing change and emerging technologies can help both advisors and their clients navigate an increasingly complex financial landscape.
For years now, we’ve been observing the emergence of robo-advisors. The long-term financial outcomes for those who’ve leveraged these online services versus a personal advisor are yet to be seen.
With all the emphasis on robo-advisors, however, it’s important to consider other fintech innovations. Whether mobile payment apps, online banking or even crowdfunding services, fintech is wide-reaching, and consumers are increasingly adopting these technologies as part of their everyday lives.
An area that you may already have enthusiastically embraced is automated email updates or follow-up. Many customer relationship management (CRM) tools include functionalities that can trigger workflows to help minimize repetitive administrative tasks and error-prone manual processes.
Artificial intelligence tools and predictive analytics may also play a role in how you as an advisor provide market insights and financial advice. Some examples might include software that automates portfolio rebalancing or data reports. Whereas an advisor might have once spent hours poring over spreadsheets and entering data, some of that time can now be spent conversing with clients.
Arguably, most financial advisors would much prefer spending that time exploring their clients’ underlying motivations and financial fears to better craft a strategy that aligns with their values. Fewer administrative tasks can also allow extra time to engage with more clients throughout the day.
For all the stereotypes attached to some technology and its potential to negatively impact relationships, it’s important to see how it can also improve them when leveraged appropriately, especially as it relates to the financial industry.
Engaging the Next Generation of Investors
Nearly every other aspect of people’s lives is touched by technology, so it stands to reason that their financial lives would be, too. As time marches on, more and more investors will likely expect advisors to include several digital tools in their arsenal.
Some older generations may be less likely to opt for fintech tools, but as any advisor knows, the great wealth transfer is on the horizon and many of those assets will eventually transfer to their younger heirs. For advisors who want to look to the future and maintain their book of business, let alone grow it, they’ll need to appeal to the next generation of digital natives.
Younger investors may have already dipped their toes in various DIY online investment platforms. However, as their wealth grows, their aversion to risk may grow with it and they may want to do more to protect their assets. If that happens, there’s a chance they’ll seek other options including the time-tested advice of an experienced financial advisor. That’s you.
As the world becomes increasingly technology-driven, advisors will need to evolve with it and embrace fintech as just another tool they can leverage to deliver strategic advice to their clients. When combined with sincere and caring human interactions — something all the AI in the world can’t replicate — the possibilities are endless.
Get to know your clients better using our award-winning Behavioral Finance Advice resources. They include exercises and interactive tools to help you and your clients collectively discover underlying motivators so that you can help them craft a financial plan that aligns with their values. Access them by clicking below.