Using FinTech to Make Financial Advisors Better

Using FinTech to Make Financial Advisors Better

Wealth management firms are increasingly turning to financial technology (FinTech) to enhance the client/advisor relationship, not just deliver self-service tools. It’s about time. That very subject is a prominent theme on this blog, and it comprises a lot of the work I do for financial services and FinTech firms.

Ernst & Young’s recent report Enhancing the Advisor and Customer Experience Through Technology cited three core themes that emerged from their survey of wealth management executive:

  1. Leverage technology to provide better experience for clients and advisors
  2. Focus on advisor effectiveness and mobile technology
  3. Maximize ROI through technology sourcing and IT organization models
  4. Continue to balance technology spend with compliance and regulatory requirements.

The survey found that 75% of wealth management firms surveyed have plans to increase client-facing time, and an equal share of firms plan to invest in mobile tools to improve advisor collaboration and effectiveness.

Will FinTech Replace Financial Advisors?

An article on the study on the Financial Planning website quoted E&Y principal Marcelo Fava as describing the rapid growth of self serve tools as a greater threat to mass market advisors than to advisors of wealthier clients;

“The low cost and effectiveness of that model is appealing, but as your move up in net worth and complexity it’s less so. Households that need tax effective financial strategies will still be willing to pay for the skills of personal advice.”

– Marcel Fava, Head of E&Y’s Americas Wealth Management  

(Read the entire Financial Planning article here: Ernst & Young: Face-Time a Priority for Financial Advisors)

In general, I tend to agree, although I will continue to watch the growth of newer entrants focused on disruptively cheaper alternatives. I don’t see FinTech replacing financial advisors for affluent clients any time soon, but I do see it is both a an opportunity and a threat. Remember the Innovator’s Dilemma anyone?

I also continue to see clients gravitating towards more omni-channel solutions, where clients can choose self-serve, advisor-assisted and advisor-driven options when and how they see fit, on any technology platform or face-to-face. We are not even in the first few pitches of the first inning on this, but it promises to be an exciting game.

(See Clients Do Not Want Help. Until They Do)