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How Wealth Managers Can Ride the Fintech Wave

How wealth managers can update their practice to stay competitive in the robo world

By now, most financial advisors are acutely aware of the disruption presented by fintech companies in wealth management. Global investment in fintech topped $19 billion in 2015, and that number is predicted to double in 2016, according to a recent Accenture report.

Flush with capital, these robo advisors and branchless banks have captured the imagination of investors—and increasingly their share-of-wallets.

No doubt today’s traditional wealth managers feel like big-wave surfer Laird Hamilton without his longboard: buffeted by waves of tech-driven disruption on the one hand, while an undercurrent of government regulation lurks below.

It doesn’t have to be this way. Wealth managers can learn from these consumer-friendly upstarts and master big waves of their own. In fact, innovation in the fintech sector is being driven by many of the same trends behind the recent surge in consumer tech, such as mobile, social and data science.

What can traditional wealth managers learn and adopt from today’s fintech disruptors? Much of it relates to applying technology to supercharge the advisor-client experience. Here are a few examples.

Personalized investment journeys

The popularity of robo advisors like Wealthfront and Betterment can at least partly be attributed to how they use self-guided questionnaires to help investors set personal financial goals and receive updates along their financial journeys. This process disintermediates the advisor, but it also misses the point. More than 60 percent of investors want to manage their money in collaboration with their financial planner, according to a 2016 Salesforce survey. Modern technologies can bridge this gap, helping advisors create automated workflows for clients around common administrative tasks, such as basic account updates, while stepping in when critical experience is needed, like opening a college fund.

Mobile investing

More than 2 billion smartphones are in use today, and this number is expected to grow to 6 billion by 2020, according to a recent report. Yet Salesforce found that half of investors with advisors discuss investment decisions in person. Is it any wonder that fintech firms with great mobile apps like Mint, Penny and others are so popular with investors? Wealth management firms that create mobile apps as an extension of their existing platforms can provide the best of both worlds—advice from a trusted advisor, delivered via an investor’s preferred channel.

Social- and community-based advice

There are more than 2.3 billion active social media users worldwide, according to one report. This is why peer-to-peer platforms like Venmo, which offer built-in social sharing capabilities, are taking off. Unfortunately, the majority of traditional wealth managers are saddled with IT systems that put investors and the products they sell into silos, with no way to collaborate with their advisors or other experts through social channels. Wealth management firms would be better served treating advice in the same spirit as social sharing. Technology can stitch together the many accounts that make up an investor's financial life to offer more holistic advice. 

Real-time analytics and alerts

Volatility is the new norm of today’s markets, and many wealth managers find themselves reactively reassuring investors over the phone during every stock market downtick. This is ultimately not scalable. Fintech disruptors have an advantage in these cases because many of their solutions offer portals with real-time performance modeling, analytics and the ability to set alerts for market events. However, all of this technology can be implemented to serve financial planners as well. And with 60 percent of investors wanting their advisors to be more proactive in the event of a downturn, according to our Salesforce survey, the time is now for advisors to update their services to better compete against solutions from fintech players.

It is clear the digital revolution in financial services is well under way, but the disruption coming from these tech-driven upstarts doesn’t have to wipe out traditional wealth management firms or their unique abilities in serving today’s investors. A new breed of technology can supercharge the advisor-investor experience. And wealth management firms that incorporate this technology into their day-to-day interactions with clients will be best served to ride the fintech wave to future financial success.

Rohit Mahna is the General Manager of Financial Services at Salesforce. He joined Salesforce in 2011 to lead the Financial Services Industry team globally. He leads the subject matter experts, strategy and marketing teams across Banking, Insurance and Wealth Management. His teams are responsible for the go-to market strategy, industry products, thought leadership and customer engagements.

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