This blog has pointed out in the past that fintech is a broad term. Representing the merger of financial services and technology, the term covers any product that offers a convenient alternative to traditional financial services. When discussing fintech, it’s also useful to be specific, focusing on the specific services and niches it is disrupting. Focusing on micro-examples helps anyone interested in new fintech developments understand their potential influence on a macro scale.
Wealth management is one niche worth paying attention to. Although fintech has certainly disrupted banking, payments, and loans to a significant degree, it’s easy to overlook how it will change the way people manage their wealth in pursuit of long-term goals.
It’s not possible to cover all the ways fintech has impacted wealth management in a single blog post, but the following points illustrate some of the more noteworthy changes that new products are ushering in.
Artificial Intelligence for Data Analysis
One of the tasks a wealth advisor handles involves analyzing data to determine how to invest a client’s money. This is a task that’s ideal for artificial intelligence. Machine learning and similar innovations allow programs to efficiently analyze data virtually non-stop. Unlike a human advisor, who needs to take breaks and may be prone to errors, artificial intelligence can perform data analysis 24/7.
This doesn’t mean AI will take the place of human advisors in the near future. It’s still necessary for an expert to translate the results of data analysis into actionable insights that will further the client’s unique goals.
That’s important to keep in mind when considering fintech’s influence on any niche within the financial services industry. Although it’s understandable that people may fear “robots will take our jobs,” that’s not likely to be the case. What’s far more likely is that AI will make the job of a financial advisor easier, giving these professionals more opportunities to prioritize the human element in their work.
That’s particularly crucial in wealth management. Clients want to know their money is in the hands of trustworthy professionals. With fintech products handling certain processes, advisors can focus more on cultivating that degree of trust.
Connecting Advisors to Clients
It’s worth noting that fintech products don’t always replace existing financial services. In many cases, they help customers access financial services more easily or in an entirely way.
This is another way in which fintech is already changing wealth management for the better. For instance, some firms have developed in-app features that allow clients to jump into video chats with their advisors through mobile devices. These features also allow both advisors and clients to upload and share relevant portfolio documents. They essentially facilitate thorough portfolio reviews in virtual environments.
Again, this example illustrates how fintech can promote the human element in wealth management, rather than detract from it. Sometimes clients can’t head to an advisor’s office to discuss their financial future. When this happens, fintech products address the problem by connecting them through an app. There’s even reason to believe that improvements in virtual reality tech will one day allow clients and advisors to “meet” in VR settings when meeting in person isn’t practical.
The fact that fintech products can help unbanked and underbanked people gain greater access to financial services is one of the main reasons they’ve seen success. For example, people who aren’t able to reach a physical bank branch can take advantage of banking services via mobile apps.
Fintech may soon usher in similar changes in wealth management. After all, historically, wealth management has been primarily available to high net worth individuals. This fact prevents people of lesser means from investing their money as effectively as possible. According to surveys, Millennials in particular indicate that they would generally like to use wealth management services, but often can’t afford to do so.
Fintech can help a wider swath of the population access wealth management services by automating tasks and helping advisors reduce spending. By driving costs down, fintech makes it easier for more customers to justify hiring an advisor. On top of that, robo-advisors may represent a more affordable, yet still effective option for customers who can’t afford the “real thing.”
Remember, fintech likely isn’t going to make people working in the wealth management sector obsolete. On the contrary, the new technologies stand to make their jobs much easier.
You already know fintech can assist in data analysis. That said, experts also point out that digital assistants, which understand voice commands, can help advisors work more efficiently than ever. For instance, if an advisor wanted to learn if any clients added more money to their accounts in the previous months, they could simply ask the digital assistant and receive the information much more quickly than they would if they had to seek it out themselves—and without having to type anything in a user interface. Once again, this gives them more time to address other tasks.
That’s good for everyone involved. Whether you’re a client or an advisor, it’s apparent that leveraging fintech is key to making smart and efficient investment decisions. It’s just one more way fintech is changing the financial services industry for the better.