Fintech Targets Client Needs

Fintech Targets Client Needs

Fintech solutions can help advisors better respond to their clients’ needs.

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Reviewed by: Gerrard Cowan
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Edited by: Gerrard Cowan

Fintech for financial advisors is a varied and complex domain, though many recent advances center on a common theme: enabling advisors to focus on client needs versus technical or administrative tasks.

For certified financial planners (CFPs), wealth management technology has evolved from back-office efficiency to front-office decision-making, forming a conduit in the advisor/client relationship, says Dave Welling, CEO of Mercer Advisors, a wealth and financial management firm.

Technology must provide a tangible benefit for advisors to gain traction, he says, such as making them more productive, enhancing the advisor/client relationship or helping them win new business.

Mercer Advisors sees this trend in every technology product category, from investments to financial planning to services like estate planning or tax services. While technology hasn’t–and won’t–replace the role of a professional advisor, it’s changing the center of gravity of where they spend their time, he adds.

“The evolution of technology in wealth management is gradually morphing the advisor role into one where the primacy is on understanding their clients' unique needs and style versus doing the math or detailed analyses involved in work such as portfolio rebalancing or retirement income funding,” Welling explained.

Brandon Rembe is chief product officer at Envestnet, which has developed an “advisor portal’” that provides financial advisors with software solutions in a range of areas, from developing investment plans to data analytics.

His company is seeing increasing demand for digital servicing in areas like fully digital onboarding, account opening, scheduling meetings, performing client reviews and more. These services aren’t a substitute for something like a robo advisor, but to help financial advisors support clients “who prefer to do these types of tasks digitally.”

Rembe highlighted a number of trends that are driving Envestnet’s product roadmap. For example, there’s demand for a single view of a client’s entire financial life, hyperpersonalization at scale, and omni-channel distribution for both clients and advisors, among other themes.

Fintech Expands Advisor Role

By strengthening integration among various technology solutions, and providing advisors with data-driven insights that expand the scope of the advice they can deliver, fintech lets advisors focus more on planning and activities that improve engagement with their clients, while laying the groundwork for future growth.

“For example, by automating and/or simplifying account aggregation, trading and rebalancing, reporting and other back-office workflows, fintech has enabled advisors to onboard and manage client relationships faster and more efficiently, while freeing them up to engage with clients and prospects,” Rembe said.

Edelman Financial Engines uses optimization and simulation engines (forms of robo advisors) and other fintech to support its work in investment management, retirement planning, personal financial planning and other services. The company has developed a connected fintech ecosystem built on internal capabilities and services from partners, says Tom Kimberly, its head of product. 

Deploying fintech can actually improve the human connection, Kimberly says, because it “allows planners to shift their focus from paperwork and reporting to deepening their relationship with the client.” Edelman Financial Engines believes the integrated ecosystem approach will grow in importance, with suppliers turning away from off-the-shelf solutions and evolving into software-as-a-service (SaaS) or platform-as-a-service providers.

“It’s less important that a single solution stands out than that it integrates effectively into our ecosystem,” he explained.

SmartAdvisor from SmartAsset is an online platform that connects advisors to prospects. The company has seen significant demand from investors as well as advisors, says Chris Sonzogni, SmartAsset’s director of advisor marketing. Advisors have raised an average of about $1.5 billion monthly this year through the platform, compared to a total of $10 billion in 2020 and $5 billion in 2019.

Pandemic Increases Demand Advice

“The growth in our business has mirrored some larger trends in the financial advice industry,” Sonzogni added, notably a growing demand for professional financial advice, driven by the pandemic. In the first six months of the pandemic, Google searches for the term “financial advisor” were up 17% compared with the 2019 average, he notes.

Tax planning software Holistiplan has seen a change in demand from financial advisors over the past three years, says Kevin Lozer, co-founder of the company. In its first year of operation, most subscribing advisors already offered tax planning services, so the ability to replace manual efforts with an automated SaaS solution saved them time. In years two and three, more advisors are signing up who haven’t previously offered tax planning, but see it as a key service, with fintech now offering a convenient way to deliver it. 

“If you’re helping clients with taxes, insurance, estate planning, charitable giving and/or any of the other financial-related decisions that people have to make in their lives, those historically have been hard for advisors to provide a consistent, scalable offering. I think fintech is helping to change that by focusing on how to scale all the other things we do as advisors,” explained Lozer, who is also a CFP with his own clientele.

Fintech Not A Replacement

Advisors are seeking to automate and outsource at an increasing rate, says Marwa Zakharia, CEO of AssetBook, a portfolio management system. “The demands on advisors in terms of investment management, planning and compliance have only grown,” she noted. However, while such technology may allow investors to manage some of their own financial life, she doesn’t believe “technology will replace advisors anytime in the near future, if ever.”

Technology can help advisors satisfy increasingly demanding client expectations, says Andy Baillie, regional vice president of EMEA at Seismic, which provides sales and marketing-focused software that helps advisors personalize and track the impact of content they share with prospects and clients.

Modern clients expect the same personalized and engaging experiences they receive from big tech companies, he notes, which can be challenging for advisors who might spend time tailoring client or prospect materials when they could be focused on higher-level priorities. Technology can manage many of these tasks on their behalf, Baillie says, though it should be seen as an enabler, not as a threat.

“Technology can automate tasks, check content and reports through compliance filters, make recommendations based on artificial intelligence. But an experienced, knowledgeable advisor will only benefit from tech, not be replaced by it.”

Gerrard Cowan is a freelance journalist who writes on finance and technology. He previously worked at The Wall Street Journal, where he edited the Business & Finance section of the European edition, and at Jane's Defence Weekly. Gerrard is the author of “The Machinery” fantasy novels, published by HarperCollins.