Forget consumers, financial technology startups are also helping financial advisors better serve their clients.
When it comes to the fintech marketplace, most of the focus is on bank challengers, mobile trading apps and online lenders. But there is a crop of fintechs that are catering to the financial services industry, digitizing data and client information so advisors can save time and create more customizable investing strategies for their client base.
Aiming to gauge how important technology is to financial advisors, discount brokerage Charles Schwab recently polled independent registered advisors and found 58% plan to invest in new technology during 2019. The advisors cited a desire to better serve existing customers, the need to reduce manual processes, taking the busy work away from employees and improving the security of computer systems as reasons for the tech investments.
There’s also a need on the part of the financial advisors to offer digital services that the robo advisors and fintech trading apps offer. Millennial investors expect a digital offering from whoever they do business with. Take Wealthfront and Betterment. They have made names for themselves by bringing investing to the masses. With algorithms and digital platforms, they are automating the process of creating a portfolio and slashing the costs along the way. They are also luring venture capitalists their way, raising hundreds of millions of dollars.
Worrisome yes, but the financial advisors still believe there is a lot of value in the human connection and view technology as a supporting role. Financial advisors want technology from the fintech companies that improve the relationships they have with existing customers and help them find new ones. As a result, customer relationship management platforms that give advisors deep insight into a customer is in demand.
Financial planning software that enables financial advisors to engage in sophisticated modeling also tops their lists. The fintech companies that are making software that enable them to create digital what-if scenarios for individual customers and software that can help them gauge and spot risk are considered to be valuable.
While financial advisors are expressing increased interest in fintech, the ones who do are still in the minority. Many independent financial advisors have little time to find new clients, let alone introduce new technology. After all, there are security issues to worry about. As well as running afoul of regulators and making sure the technology works with their existing systems. As a result, they are taking a cautious approach, making sure they are choosing fintech solutions that will be around over the long haul.
