The rise of fintech in wealth management
The strong and crafty may prevail in the short term, but Darwin’s teachings imply that those who are unable to adapt may wind up on the endangered species list. Financial technology, sometimes known as “fintech,” refers to the introduction of new technologies used to enhance and automate the delivery of financial services.
The advent of robo-advisors, as well as the growth of artificial intelligence (AI) tools, has altered how financial advisors engage with and deliver services to their customers.
Despite all of the financial services and technological advancements that have the ability to put human advisers to the test, their function and value in assisting investors in navigating complexity and meeting their goals has only grown in demand.
Advisors have often demonstrated their ability to adjust to structural changes. In reality, advisers have been able to adapt to these developments by developing new models that capitalize on commission and technological disruption.
Advisor’s To Thrive With FinTech Rise
Every year, the fintech drumbeat get louder. According to KPMG Pulse, global investments in financial technology projects will total $210 billion in 2021. Payments, cybersecurity, insurtech, wealthtech, regtech, and blockchain and cryptocurrency are all fintech sector segments.
This boom in fintech industry investment might be attributed to the growth of robo-advisors. According to industry research, the overall worth of robo-advisors was almost $4.51 billion in 2019, with a projected increase to $41.07 billion by 2027.
The Rise of Artificial Intelligence
The growth of artificial intelligence (AI) products into the wealth management environment has created a splash in the financial trade press. While it is still early, AI’s function in financial advising is one to keep an eye on.
The release of Salesforce’s Einstein predictive analytics tool provides the industry cause to evaluate the role of AI in assisting advisers with where to focus or automating jobs. The same is true of IBM Watson’s collaboration with H&R Block.
AI-powered algorithms are assisting financial organizations in extracting important insights from client data in real-time, with the ability to manage even larger transactional volumes than traditional banking models. This capability is assisting them in supplementing their underwriting procedures, allowing them to use new risk assessment methodologies and extend credit to people who were previously ineligible.
AI is also helping banks and financial organizations to provide tailored financial services to customers by evaluating prior customer behavior and understanding their evolving preferences. One example of this trend is the rising usage of AI-powered virtual assistants to answer client concerns 24X7 while also delivering tailored suggestions.
What is Fintech to Advisors?
First and foremost, it is obvious that investors demand digital tools as part of their engagement with their financial adviser. They like online cooperation and digital tools in other aspects of their lives, so why shouldn’t they enjoy them when it comes to asset management?
Second, advisers must guarantee that they are connecting with customers in novel ways. Not every client has time to visit the office. Clients who are still working want communications with their advisers to be quick and to the point. They also want to be able to evaluate material on their own at any time via a client portal and to check in with their adviser using online collaboration tools. This on-demand access offers the highest level of openness.
Third, there is the issue of value—specifically, customers’ sense of the value that their advisers provide. Many advisers provide much more than investing advice and portfolio management, but it’s unclear if investors comprehend all of the “extra” help they’re getting.
Conclusion
According to a 2020 generational poll, 41% of all generations polled would consider utilizing a robo-advisor. However, over half of Generation Z and millennials are comfortable with a robo-advisor making individualized investing recommendations, but just one-third of Generation X and 15% of baby boomers are.
However, it adds another motive for advisers to maintain their valued ties. After all, we know that trust and communication are important elements in whether or not investors choose or leave an adviser. Fintech may assist clients in a variety of ways if it is implemented correctly. Aside from digital experience and transparency, new competition is pushing down costs and cutting overhead and some manual procedures for advisers.
