The rise of fintech has transformed numerous financial services. But while many people have noticed fintech’s impact on traditional banking, they should not overlook its potential to disrupt financial advising.
This transformation will likely manifest in several ways. Whether you’re a financial advisor or simply a consumer in need of financial advising services, read on for some important points to keep in mind going forward.
Making Financial Advising Easier
Don’t make the mistake of assuming financial advisors need to start looking for other jobs due to the advent of fintech products. Although many people assume new technologies will replace human workers, it’s in fact far more likely that fintech will help financial advisors work more efficiently and effectively.
Statistics reflect this assumption. According to a recent survey, more than half of all financial advisory firms plan on leveraging new technology to a greater degree in the coming years. This is primarily because fintech helps them attract more clients, who in turn, can use fintech products to more actively participate in their own wealth management.
There are several reasons why fintech can be a boon to financial advisors. For instance, new technologies can handle many time-consuming tasks that advisors would typically be required to address themselves, such as rebalancing portfolios and aggregating data. Not only does this give advisors more time to serve additional clients, but it allows them to provide their current clients with more personal attention. Instead of discussing technical data with clients, advisors can show them how strategic financial planning will benefit all aspects of their lives. Understanding the greater context of their wealth helps clients better understand how they can plan for the future.
This is an example of fintech ushering in a bright future for traditional financial service providers. While it likely will be necessary for banks and other institutions to partner with fintech companies in some capacity if they wish to stay relevant in a changing industry, in general, fintech developments will help, rather than hurt, financial planning professionals.
Illustrating Complicated Topics
Providing greater context and saving time isn’t the only way fintech helps financial advisors offer their clients better service than ever before. Many financial advisors have also found that fintech tools help them explain and illustrate concepts that clients often struggle to understand.
For example, with new fintech programs, financial advisors can demonstrate to a client how various potential scenarios will impact their tax liability. They can also more dynamically and clearly outline concepts such as IRA contribution limits.
Financial management and planning can be very confusing for obvious reasons. However, it’s still essential that financial advisors do all they can to ensure their clients understand key ideas. Because fintech allows them to do so with ease, firms are making substantial investments in developing fintech products, knowing that leveraging these tools helps them stand out among the competition.
Expanding Access to Financial Planning
Before people can understand how to manage their finances, they need to have access to a financial planning service. By being available online or through mobile apps, fintech expands access to almost anyone, particularly to those who have been historically underserved due to location or finances.
In the past, financial planning and wealth management services were at a premium, making them available only to relatively high-net-worth individuals. Fortunately, fintech is stepping in to fill the gap. Robo-advisors can use artificial intelligence to perform data analysis, just like a human advisor, offering the same types of insights and suggestions but at a much lower cost.
This is another instance in which new technologies are expanding financial opportunities, helping to create a level playing field for everyone.
Improving User Experience
The average consumer shouldn’t try to handle their wealth management on their own. Trusting a qualified professional with the relevant experience is essential when planning one’s financial future.
That said, there are some wealth management tasks that a consumer could theoretically undertake themselves if they had access to the right tools. Simply checking their portfolio’s growth and reviewing key insights is certainly something a consumer can do without having to schedule a meeting with their financial advisor.
In general, fintech entrepreneurs strive to create products that allow users to perform key financial tasks with ease. Although it’s still necessary to coordinate with an expert, a financial advisor’s services may soon be supplemented—perhaps even enhanced—by an app.
These developments represent just some of the more noteworthy ways that fintech is changing financial advising for the better. Just remember, as the technology continues to improve, its value will only grow.