Technology is changing the financial services industry and investing to meet the demands of investors for more social interaction, more transparency and lower costs, said Hardeep Walia, co-founder and CEO of Motif Investing during NAPFA’s fall conference in Charlotte, N.C. this morning.
One trend changing the industry is the robo advisor, online advice platforms that are gaining steam; many fear these platforms could replace the flesh and blood advisor. But Walia believes the worries are overstated.
“When all settles down, what you’re going to find out is everyone’s going to use a robo advisor,” he said. “Think of it as an autopilot where an advisor can be in control, an individual can be in control. There are people who fly planes; there are people who have other people fly planes for them.”
Walia believes software can’t replace the human relationship, and it can’t tailor financial advice. But he urges advisors not to fear the technology that robos are developing. Instead, the industry should embrace the technology and can use it to their advantage.
Another important trend is that people care about what they’re invested in more than other generations. He calls them “values investors.”
Investing is also becoming more social, he said, with many brokerages developing community sections. Motif has a social platform where customers can connect and share ideas.
Looks matter, he added. If you walk around the exhibit hall at the NAPFA conference, he says you’ll find that traditional products are made prettier. Aesthetics are important, and financial services companies will work to make their products more usable and beautiful.
Investing products will start to be crowd-sourced, Walia said.
The economics of investing will change dramatically. Walia expects fees to come down in investing products such as 529 plans and 401(k)s.
Children will become a focus, as there’s a renewed effort to teach children how to invest. For example, when Motif held a competition for college students to create a motif that outperforms, a group of 11-year-old kids in Fargo, N.D., ended up winning. Investing will be made more accessible to younger generations.
Lastly, the regulators will get super tech-savvy. He pointed to FINRA’s CARDS initiative, which will require brokerages to submit data and account information to the regulator, as an example. The regulatory framework has to keep up, Walia said, and use the same technology that the firms themselves use.