The introduction of FinTechs in the wealth management space has brought about tremendous changes in how financial services are delivered. These new technologies have focused primarily on client wants and needs. However, catering to financial adviser desires is just as important.
Most advisers turn to FinTech solutions to free up their time from more redundant tasks and focus on providing comprehensive services to their clients.
When asked about their technology expectations, 80% of advisers want to be able to focus on the client relationship. Of those, 90% have needs for client onboarding and portfolio data management, 85% for client service and communication, and 83% for analytics. This data comes from a study conducted in the United States by the Institutional Investor’s Custom Research Lab.
Focusing on the essential areas of the business would also allow advisers to offer a more client-centric approach. In turn, this means improving customer satisfaction, which is a win-win proposition. Luckily, the latest FinTech solutions seem to promise just that, by streamlining and simplifying the financial advisor’s role and responsibilities.
Humans vs. FinTechs
While some financial advisers may fear ultimately being replaced by robo-advisors, this is far from reality. In fact, a 2022 study by Vanguard found that 93% of investors already advised by humans stated that they would choose a service that includes a human adviser in the future. Moreover, 88% of investors with digital advisers said they would be willing to work with a human in the future.
Despite an exodus of investors from self-directed investment tools in 2022, a Forbes article predicted strong interest in hybrid investing in 2023. In fact, Vanguard’s study helps us understand why: It suggests that investors have different expectations from human and digital advisers, depending on the specific task.
Investors tend to prefer human interactions for soft skills like building relationships and addressing their individual needs and emotions, citing peace of mind as a primary factor. For example, investors prefer a face-to-face adviser to develop a holistic retirement plan that considers the client’s emotional needs.
Conversely, when it comes to making objective decisions, investors typically prefer an algorithm. For instance, they are more likely to trust a robo adviser that recommends purchasing specific financial products to improve portfolio diversification.
This difference in client preferences shows how effectively FinTechs and humans can complement each other. As a result, investment advisory teams have a unique opportunity to adopt a range of tools to better serve their clients. FinTech integration can also lighten their own workload. This allows them to focus on other tasks that benefit both their firm and their clients.
3 challenges for investment advisers
Today’s advisers face unique challenges in the form of increasing workloads and client expectations. This leaves many with little time to optimally develop their firm’s potential. Under these circumstances, they seek to spend more time engaging with their clients and less on mundane management tasks. They face three main challenges:
-
Proliferation of financial solutions
The first challenge is the use of various financial software resulting in an unorganised system that is far from streamlined. A poorly arranged set of tools ultimately results in increased workload.
To address this issue, firms have two options available, and the most effective solution is likely to incorporate both strategies. First, they must choose an all-in-one solution that covers the widest range of tools possible. Secondly, they must choose tools that have superior interconnectivity capabilities, namely through application programming interfaces (APIs). -
Customisation of client relationships
Recent disruptions in client expectations are largely due to significant advances in digital technologies, accelerated by the pandemic. As a result, today’s clients have become more demanding and expect more client-centric financial planning services.
The excessive customisation of financial services is a double-edged sword. Maximising service customisation to fit the unique needs of clients is sure to improve customer satisfaction. However, it is also incredibly inefficient for financial advisers.
Advisers have the option to specialise in a particular segment of investors who share common needs and characteristics. As the baby boomer generation ages, promising new market segments are emerging. A successful segmentation strategy reduces the number of personas to which one must adapt, and helps standardise interactions.
Another aspect of this problem is the significant amount of time that advisers spend creating customised client reports. Fortunately, some wealth management platforms provide tools that help advisers in generating customised reports and targeted marketing information. -
Administration and compliance
In addition, administrative tasks and legal compliance can be a burden for many firms. Although necessary for efficient operations, they are often complex and time-consuming for advisers and support staff who would prefer to spend their time on more profitable tasks.
Fortunately, FinTech solutions can help streamline these management tasks and provide a competitive edge for advisers. Some solutions offer automated workflows or task managers that identify portfolios requiring attention, time-sensitive tasks, and priorities. To meet the unique needs of each adviser, such software should be highly customisable.
Grouping activities is another effective approach to minimise time wastage. Therefore, tools that allow for aggregating and executing multiple actions at once are crucial. Additionally, an efficient order aggregator is also essential, since it not only saves a significant amount of time but also reduces transaction costs.
Finally, compliance with laws and regulations must be intrinsic to any effective solution.
Read the original article here.
