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It is safe to say that the FinTech revolution is happening.
FinTech, put simply, is financial technology. It refers to the technology that is becoming increasingly important in the world of financial services, and is beginning to disrupt the way business operates. FinTech can include everything from mobile banking to modern compliance to digital investment advisory.
According to Accenture, global investment in financial services technology ventures has more than tripled during the last five years – from under $930 million in 2008 to more than 2.97 billion in 2013. The number of investments in FinTech is increasing year-over-year at an unbelievable rate. The growth of investment in FinTech signifies how technology and the Internet are changing the nature of financial services. From the ways that people pay their bills, to the way they use the Internet to invest their money.
So, what are some of the things that FinTech can accomplish for the general public?
In this article, we will focus on digital investment advisory and what this means for traditional financial service institutions and advisory firms.
What does the #FinTech disruption mean for Financial Advisors?
The rise of FinTech is particularly significant for traditional financial service brands. We are seeing a rise of new companies offering technology-based programs that provide a complete suite of financial services and investment advice – also known as robo-advisors. This had lead to many questioning, why pay to see a Financial Advisor when you can get financial advice online for a fraction of the price? And, why not question it? These platforms offer many sophisticated tools at a third or less of the price of a Financial Advisor.
Financial Institutions and Advisors need to ask themselves, what is in it for the client? Where can a Financial Advisor make the customer experience and human touch worth going with a traditional Advisor over a robo-advisor? With the #FinTech disruption in full swing, the online presence of Financial Enterprises and its Advisors has never been so important.
One of the best ways for traditional financial service companies to beat the robo-advisors is through developing an effective online presence and client experience.
The Future Investors
Almost 80 million Millennials will stand to inherit $30 trillion in personal wealth and grow their earnings in the coming years. Financial institutions and Advisors that are digital savvy will be the ones to thrive and this is evident in research conducted by Fidelity. Fidelity’s research confirms that emerging affluent investors are nearly twice as likely as millionaires to find a new Financial Advisor through Internet research and more likely than millionaires to find a new advisor through social media.
Fidelity’s research also finds that 58 percent of emerging affluent investors have a significantly more positive impression of financial advisors who have a good website (key word here is good. There are many Advisor websites out there that are as non engaging as a business card). Thirty-eight percent of those investors follow their Advisor on social media sites and 30 percent say they are more likely to relate to a Financial Advisor who has a social media presence.
If the Financial Enterprise does not enable the Advisory firms to have an online presence in order to communicate with clients and prospects, the financial institution risks making their Advisors irrelevant because they are not connecting with the next generation of investors. An active and compliant online presence for Advisors is the human and real life touch that sets them apart from the robo-advisors: the ability to educate, interact and engage with prospects and clients.
Financial service institutions have traditionally been slow to embrace digital marketing trends.
In a regulated industry, it is important to make compliance and legal a part of your digital and social media teams so you have approval from the beginning of campaigns. It is time for Financial Institutions to stop using compliance and regulations as an excuse to grow their brand and their Advisors’ businesses.