By Daniel Lee
The wealth management industry can no longer ignore the rise of fintech. Investors have pumped more than $100 billion into the fintech market since 2010—including $6 billion in the first quarter of 2019. Those investments are going toward things like robo-advisors and investment apps that help Millennials streamline their personal investments.I first noticed the fintech trend about a decade ago. Now, I can see that fintech is shaping the future of wealth management.
I needed a better way to manage my budget, so I created a few Excel macros and thought I had the seed of a startup idea. I showed my work to a friend who promptly asked whether I’d heard of Mint.com. After spending some time exploring the then-nascent financial management app, I realized it did everything my macros did—and a lot more. Even at that early stage, the potential for disruption in wealth management was obvious.
Mint and other pioneering fintech apps showed that the value of these technologies lies in their abilities to make something confusing relatively user-friendly for the first time. That’s not surprising considering the fintech industry first gained traction in the wake of the global financial meltdown—a time when confidence in banks and financial institutions plummeted.
When robo-advisors first introduced consumers to friendly interfaces and accessible tools, they quickly demonstrated the value of a tech-driven approach. Users might have been the first ones to realize this, but the industry now also understands it.
The Future of Wealth Management
Up until a decade ago, the wealth management industry was relatively resistant to technology. The years since have seen more enthusiasm and implementation, but fintech innovation in wealth management is still in the early stages.
Thus far, the industry has focused on convenience and accessibility. Moving forward, we should expect big data, connected devices and artificial intelligence to push the applications in exciting new directions. Everything from insurance to estate planning to equity compensation is ripe for innovation, and changes will come quickly.
Exactly how fintech will progress is a mystery, but we can anticipate some broad digital trends in wealth management. In one survey, for example, 75% of respondents had already tried a fintech transfer or payment service (like Venmo). That figure will increase as the technology becomes easier to use and more consumers adopt it. What’s more, the user-friendly features that consumers already enjoy will improve as the companies behind fintech apps release updates and additional features.
Additionally, costs will decline as technology makes basic services free or less expensive.
Robo-advising, for instance, is less expensive for firms to deliver, which makes it less expensive for clients. It’s no surprise the robo-advisor industry is expected to draw an estimated $2 trillion by 2020.
By lowering the cost and reducing the complexity of financial services, fintech makes them accessible to a wider base of society. In the past, firms worked mostly with families with seven figures in assets; new technologies have made the industry more …read more
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