Shutdowns, working from home, distance work arrangements and social distancing accelerated the adoption of a number of technologies for financial advisers. I've heard this statement numerous times from fintech CEOs and leaders: “Adoption is the next innovation.”
With the adoption of new technologies and solutions comes fundamental shifts in the financial services industry. Just look at this year — many advisers and clients might not return fully to in-person meetings after having adopted technologies for distanced meetings and communications.
This change opens up the geographical market for advisers and consumers, in essence shifting the landscape of which clients you can serve and who you should be marketing to as an adviser. Let’s look at how some other technology adoptions in 2021 could shift the landscape for financial advisers.
I spoke to Kevin Lozer, co-founder of Holistiplan, about how his tax planning software can help advisers improve their client experience and offering. Holistiplan allows you to upload a tax return and within minutes get a client-ready analysis that could point out numerous tax planning opportunities. This could take advisers hours in the past, if they even did tax planning at all.
With this software, you can do more tax-efficient planning for all of your clients at scale. This type of hands-off planning software for an adviser can allow for radically more efficient client-adviser relationships. I am extremely bullish on the technology and I really do believe that 40% to 60% of financial advisers will be using this type of tax planning software in the next two years.
Andrew Altfest, president of Altfest Personal Wealth Management and founder of FP Alpha, spoke to me about why he created the software, which is powered by artificial intelligence, and how fee compression and the rise of robo-DIY platforms are putting pressure on traditional financial advisers to be more efficient and enhance their overall practices. What Andrew set out to build with FP Alpha is a more dynamic, comprehensive financial planning software built on AI that enables advisers to automate manual tasks, demonstrate their value beyond investments, and quantify the value of their advice, all while identifying planning opportunities based on client data across more than 15 disciplines such as tax, estate and insurance. It also is complementary to an adviser’s existing financial planning software.
This is in essence trying to bring the complex aspects of AI technology, available in everyday life, and apply them to wealth management to meet the needs of today’s desire for instant gratification. With FP Alpha, you can upload a variety of client’s financial documents, say a trust, will, tax return, or insurance policy and obtain instant feedback from the system on gaps, deficiencies, or missing planning opportunities to address with the clients.
For those that don’t know me well, I love the retirement income space. When I was with The American College of Financial Services and building the retirement income certified professional designation program with Professor David Littell, I met Sheryl O’Connor, the CEO and co-founder of IncomeConductor. O'Connor and her team built a retirement income software that can help advisers show the value of bucketing, time segmentation, and test dynamic plans over time.
One feature that intrigues me about the IncomeConductor software is that it allows you to test the original plan and modify it over time very seamlessly with the client. We all know that plans have to be dynamic and change over time, and the IncomeConductor team has done a masterful job of creating the living, breathing, moving version of a retirement income plan.
O'Connor told me that one of the main hurdles she sees in fintech adoption moving forward is inertia. The reality is that “most people see adopting technology as a disruption to their business and may not even change when the market demands they retool to become more efficient and thrive. However, those that are being strategic in adopting great technology can support their business growth and go after newer markets like retirement income planning.”
Advisers know that they need to probe and understand risk when designing investment and financial plans for clients. However, Aladin Abughazaleh, CEO and co-founder of ATA RiskStation, believes that many advisers and technologies are still looking at the risk discussion as part of the sales process rather as a two-way conversation that helps the adviser better understand what a client can live with and how likely they are stay committed to the financial plan during periods of stress. That same conversation can also help educate the clients on what is actually driving risk in their portfolios so they would be less surprised by how they can behave under different scenarios.
The current pandemic is another object lesson that advisers and clients cannot control markets, but they can create flexible plans, allowing clients to maintain control over their emotions and actions. Aladdin stressed that adviser-client risk conversations work best if they are early, frequent and based on facts — not hopes.
Tyrone Ross, CEO of Onramp Invest, set out to anticipate client and adviser needs related to Bitcoin investments. The platform is a digital-native investment platform to help the next generation of advisers actually service, in a compliant and holistic way, the needs of clients looking to trade, hold, and store Bitcoin with their advisers.
Ross is passionate about the future of Bitcoin and filling the gap in the market of a workable solution today for financial advisers. As the digital currency is adopted by more consumers, the pressure for advisers to understand the crypto space and to have a solution will continue to mount, and this is where Ross is positioning Onramp Invest.
He is one of the most driven, hardworking and inspirational leaders out there in the financial services arena, so keep an eye out on what Onramp Invest is doing in 2021.
Oleg Tishkevish, the founder of Invent.us, has a long track record of developing innovative and creative solutions for financial services. I also kept Invent.us here as the final company for a reason: It aims to bring all of the fintech solutions together into one workable system.
As I mentioned above: Adoption is the new innovation. However, we can’t expect adoption to just occur naturally. Instead, we need something to move it. That is inertia: Something not in motion won’t move unless it is moved. Tishkevish wants to be the mover.
Invent.us is setting out to integrate software for financial planning, customer relationship management, reporting and other specific technology needs. Tishkevish, unlike many others, doesn’t think we have too many fintech companies. He thinks we need more, but we also need a solution to connect them so that easy, adaptable, and efficient adoption can take place.
To me, technology is no longer the threat we as advisers thought it was just a few years ago. Instead, technology will be a great tool and solution for advisers to scale, become efficient and better serve a more diverse set of clients.
Technology, if adopted, can democratize financial advice. Today, we do not get quality financial advice to enough people and I hope these technologies through increased adoption in 2021 can take more advice to more people by allowing more efficient advisers to serve a broader group.
Jamie Hopkins is director of retirement research for Carson Group and managing director of Carson Coaching.
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