Marketing Info

What advisors want from Wealthtech

Everything will be fine

“The future is about building better trust. We will build trust through accurate models and a clear message.

I was discussing the risk with a customer who said, ‘I just want to know that everything will be okay.’ In five years, the software will respond better to that by incorporating more robust ideas about risks, returns and life scenarios. Essentially, the improvements will be just calculators, but powerful ones that achieve greater accuracy and a better ability to run through every conceivable result. Using software, professionals still need to interpret the results. Like now, professionals will know their clients and human behavior, which helps them deliver reliable answers. Essentially planners rely on their own understanding to say, ‘All will be well.’

In the year 2050, software will communicate better with customers. The consultants will get a report tailored to the client. The software will add details to the report based on machine learning predictions. The technology will consider customers’ behavior to determine what they want to see. Detail-oriented, Type-A personalities will find pages of data brimming with multiple scenarios. Hands-off investors will get a printout that says ‘all will be well’. The hands-off investor will know they can learn more when needed, but they rarely do. The software has almost perfect knowledge of each customer’s preferences and shows them exactly what they need.

In the end, it will still be consultants using their software to assist customers. Technology will be another tool to build trust in the financial system and build relationships with customers.”

—Robert Persichte, financial planner, DelaGify Financial, Arvada, Colo.

Linked Up & More Remote

“Over the next five years, I expect all the technology that supports our independent practices to be able to easily link and account linking between providers will improve, as every provider of account linking fails a lot.

In addition, I expect our practices to be more remote operating as the individual advisor model is gradually phased out as our society grapples with the ills, risks of driving, and the lack of need for a strong handshake to trust the financial planner Used to be. becomes more common. The proof of this is evident in the success of firms like Facet Wealth, Fisher Investment etc.

By 2050, I expect clients to be able to obtain specialist financial advice mostly through their employer as an employee benefit, but still choose to hire advisors elsewhere with expertise that is more often than what they are doing. Looking for matches it.

I expect that the main differentiating practices will be the specific expertise that is the need of the hour/ready to counsel clients through markets and their decisions, motivational interviews and helping individuals incorporate project management practices. There is a lack of discipline. The way they live their financial lives, really make the necessary changes to be able to live a good life.

I expect fees to remain the same and our fee reduction will be slow, as it is no longer a fee game that Schwab, M1 Finance and others have basically freed up investment management. The real reason our clients pay the fee is not for investment management, but for consultation, discretion, technical expertise, a clean/easy technical experience and trust.”

—Blaine Thiderman, Founder and Principal Advisor, Progress Wealth Management, Arvada, Colo.

Automation to avoid duplication

“Five years from now technology will allow us to avoid duplication of data and work across systems. Custodians have come a long way to move from paper to electronic, and with it has come the efficiency of avoiding some of the duplication of work. I expect this to continue over the next five years as it benefits patrons by increasing efficiency and requiring fewer back-office staff and consultants.

By 2050, I expect technology to automate most of our low-value-added tasks like reading through troves of documents to find useful information. There is already technology like HolistiPlan that will sift through tax returns and extract the necessary information, and I expect this topic to continue in the decades to come.

—Noah Damsky, principal, Marina Wealth Advisors, Los Angeles

Democratization of the Financial Services Industry

“I believe we are witnessing democratization in the financial services industry and a change in the value proposition of advisors. The days of ‘managing’ assets or providing access to a product are over. The advisors who will be successful are over. They are the ones that will provide both the best customer experience and results.These needs are going to change the money management landscape forever.

Within five years, each portfolio management software will have the ability to integrate with services such as Zapier and IFTTT allowing advisors to personalize and automate their practices. Private banking-style client portals that allow clients to easily link their accounts, view and direct investment decisions, and communicate with their advisors will be required. Tools that use artificial intelligence to enhance consultants and help them and their teams to be lean and ultra-focused will become essential for all firms.

By 2050, I think most financial planning will be AI- and app-based, and the planning will be done for you automatically by your employer/benefits provider. I imagine people will turn to a single regulated fiduciary advisor for all their investment, insurance, financial planning and tax-preparation needs. I think financial planning software will become regulated, which will reduce the number of options available, and consolidate services for some of the bigger players. I think the winning players are those who empower consultants to create custom and personalized experiences for their clients – while minimizing their operating costs and maximizing their profitability.

—Leibel Sternbach, Chief Technology Officer, Fusion Capital Management, Dallas

Financial planners are here to stay

“I believe today’s ‘robo advisor’ is poised for a massive upgrade over the next decade. Most robos offer simple investment strategies—typically an index-based portfolio, perhaps with a factor of inclination.” Also, adjusted to one’s risk tolerance.Advisors often compete successfully against robos using more sophisticated investment processes.

For example, many robos rely on historical return/risk data to optimize portfolios, while an advisor is building a portfolio based on forward-looking assumptions. Many robos use mutual funds and ETFs to build portfolios, while individual stock strategies may be viewed as ‘better’ by a client. Robo advisors do not adjust portfolio risk levels due to economic and market conditions, and they generally do not provide meaningful access to alternative asset classes.

Here’s the bad news. Implementing any of the above is doable enough for a robo. Capital market assumptions can be made or buy for future-oriented portfolio optimization, stock selection can be automated (for example, factor investing), risk mitigation strategies can be automated (for example, trend following) , and will only have a few joint ventures with which to integrate options into traditional robo portfolios as ‘accessible-alt’ companies such as Fundrise, Lending Club or EquityGen.

Long term, I believe that most investment management strategies will be automated and very low-cost. Integrating a plan with financial planning and an investment strategy would be difficult, however, as each plan is tailored to each client. For this reason, I think financial planners are here to stay, whereas many ‘investment only’ advisors may eventually head to the tar pit.”

—Chris Diodato, founder, Wealth Financial Planning, Palm Beach Gardens, Fla.

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