Remember the days, on the floors of convention centres across America, when whispers of impending robo-advisors sent shivers down the spines of the financial industry? The visions of half human, half machine Schwarzenegger-esque robots, loomed ready to pounce on your clients and your share of the hard earned fees – i.e., $$$ – all from the comfort of the internet.
Questions like, “what is this technology that can advise on thousands of dollars with minimal to no effort? Is this the end of financial planning as we know it?” Were followed with answers like, “nothing can replace the experience of a trusted financial planner” and “robo-advisors are a trend that won’t outlast the real professionals.”
True or false: are robo-advisors the future?
Robo-advisors were continually seen as a threat and not welcome in the, let’s be honest, ageing financial industry. To be clear when I’m talking about robo-advisor, I’m not actually talking cyborg robots. I’m talking about a tool or “a service that uses highly specialized software to do the job of wealth managers or investment advisors1” – technology. But all too often were robo-advisors seen as a hazard, removing the human element from financial advising.
It should also be noted that most, if not all, of this threatening technology was already used by financial advisors to make predictions and recommendations in financial planning since around the dawn of the desktop computer.
The overall purpose of these robo-advisors were that these programs, after a few simple questions, could essentially remove the middleman – the financial advisor, providing recommendations on where to invest and diversify. Of course for the client, this was all too beneficial with a more time and cost efficient solution.
You can enhance your client’s experience with robo-advisors
Fast forward 3 or 4 years and – thankfully – the industry has evolved past the furried threat of the rise of robots, to a land where man and machine work in harmony to help your clients’ money and future grow. And as someone who works in marketing, thank goodness the industry has dropped the robot army for something the field and the world can get behind – FinTech. And maybe because I’ve been in the tech world for too long, or maybe it’s simply because it’s 2017, but let’s all agree technology is something to be embraced not Terminated.
FinTech or #FinTech for the millennial skew is the rise of apps, tech, software and even hardware to help the average person manage their money. It’s less of a direct threat to the financial advisor, and more of a tool to enhance the client experience, if, like previously said, the technology is embraced.
After all, knowledge is power and with the rise of FinTech, financial trends, investing, budgeting, and banking are becoming more digestible to the everyday person.
Want to make more money? Look no further than FinTech
Of course with the financial industry being so complex, these tools have their drawbacks, and potentially even harmful effects. But no one can deny, especially in the age of the smartphone, that financial technology – FinTech – is having a boom. FinTech is no longer a savvy buzzword, but a genuine sector straddling the finance and technology worlds. Essentially, the tech sector has set out to disrupt the financial industry.
Innovation often follows money, and we all know there’s no short of cash on Wall Street. And I can say with certainty that, although robo-advisors have come and gone, FinTech is here to stay. Investment in the industry has increased from $930 million in 2008 to more than $12 billion by early 20152. FinTech can’t be ignored.
FinTech is your new business partner
But what exactly is FinTech? FinTech or financial technology is just that, technology relating to the financial field. It’s emerged as an industry composed of companies that create new technology and innovations in order to compete in the marketplace of traditional financial institutions, especially in the delivery of financial services.
Think beyond just Mint to other companies like Nutmeg, an online intelligent investment portfolio, and WorldRemit, a startup trying to challenge the $600 billion remittances market and challenge players such as Western Union.
The advances in technology in this sector is threatening the financial industry as we know it. In fact a frankly scary statistic from the World Economic Forum predicts, “up to 30% of current employees in banks across Europe and the US may lose their jobs to technology by 2025, according to the report by Citigroup, which forecasts that around 1.8 million positions will go – mainly as a result of the automation of retail banking.”
Banks are taking a piece of the FinTech pie
Although theses are uncertain times, the reality is that a mix of traditional financial services and FinTech are needed to help the modern investor/planner meet and exceed all expectations. As expected big banks are adapting to the change in industry by partnering with the top tier emerging technology. One of bankings’ largest players, JP Morgan, understands the value in FinTech especially well, and recently partnered with OnDeck Capital to better serve small business owners. JP Morgan additionally purchased $1 billion of Lending Club loans to add to its growing tech initiatives.
You’re losing out on potential clients
At the end of the day, the robo-advisor may not be a threat, but unless advisors everywhere embrace the ever growing FinTech sector, they can bet they’ll be losing a large chunk of potential clients. A whopping 71% of millennials would rather see their dentist than deal with their bank according to a recent TechCrunch article. I literally hate the dentist, but a part of me agrees that it’s less painful than the bank sometimes.
That’s a huge chunk of the emerging demographic of investors forgoing the standard financial advisors. Advisors now have to be more available and nimble than ever. Things like encouraging budget tracking software, to making more data driven decisions, to making yourself available past – dare I say it- banking hours will help advisors stand out from reluctant peers in the industry.
So although robo-advising, with their question and answer guidance, may not be saying, “I’ll be back” anytime soon, FinTech is here to stay. FinTech is not only touching the financial industry but all businesses and the financial industry services, which to my understanding is nearly everyone.
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