Fintech Financial Advisors-If some financial advisors seem to know clients’ needs before they do, there’s a good chance software is part of the reason.
Financial technology — or fintech, for short — has increased competition in the advice business via automated online platforms. Yet at the same time, advisors have found that those digital advances have bolstered their ability to serve clients, both by freeing up their time and helping their businesses run more efficiently.
“It allows us to better advise our clients, quite frankly,” said Lisa Casciaro, a certified financial planner based in Sparta, New Jersey, and president of the state’s Financial Planning Association chapter.
“It’s been good for advisors, but also for consumers,” Casciaro said, adding that she has expanded her client base from the wealthy to the so-called mass affluent due to the evolution of fintech and the extra time it’s given her.
The term fintech generally refers to technology that enables parts of the financial services world to be automated. For advisors, it means that tasks such as portfolio rebalancing and data aggregation are now done by software, and keeping tabs on the particulars of each client’s situation is handled by digitized systems. The result is less time spent crunching numbers, entering data and poring over spreadsheets.
“There’s more time to discuss work-life balance, health, kids, starting a side business, home-improvement projects, et cetera,” said CFP LaKhaun McKinley, owner of MNM Vested in Grand Rapids, Michigan.
“This helps clients understand that financial planning goes beyond their retirement accounts and that I can be a helpful partner and resource for more than just investment advice,” McKinley said.
Among independent advisory firms, 58% plan to invest in new technology this year, according to a study released last month by Schwab Advisory Services. Top reasons include wanting to serve more clients (38%), reducing manual work (20%), letting employees focus on high-value work (17%) and improving security (11%).
While the amount of money that advisors spend on fintech is hard to quantify, venture capitalists and other sophisticated investors view the entire fintech universe as a promising market: In 2018, $16.6 billion flowed into U.S. fintech firms, up 46% from $11.3 billion in 2017, according to Accenture, a global consulting firm. Including investments in other countries, the 2018 amount was $55.3 billion, more than double the $27.4 billion recorded a year earlier.