Technology is disrupting every industry and financial services is no exception. Financial technology has evolved through app development for smart phones and social media for client communication. Recent studies show 99% of advisors have cell phones (68% are iPhones) and over 85% use social media. The impact of this technological revelation knows no limits.
Clients benefit from financial technology. We expect access to our information 24 hours per day, and millennials take a hands on approach to fiscal management. Big data and cloud computing is changing and improving the financial services industry. Advisors and wholesalers who want to remain relevant should evaluate their response. The most impactful changes are:
- Mobile Tech – Firms are moving away from their reliance on laptop computers. Cell phones are more powerful than computers used to put man on the moon. Video conferencing, webinars and client presentations are easily conducted from most iPhones, Samsung devices and tablets. Clients are using the hundreds of available apps to manage finances and conduct research. With the growth of broadband data and wifi hot spots, advisors are running their businesses from anywhere. Cell phones are no longer just for Angry Birds and Netflix.
- Social Media – LinkedIn is the most popular social media network advisors utilize, and it is helping to grow their assets under management (AUM). Successful advisors are consistent in their use of social media (daily), and they run a book of business worth $92 million. More than 35% of large advisors (more than $100 million AUM) say social media played a major role in marketing efforts. An effective financial technology strategy incorporates social media to generate leads and increase relationships.
- Robo-Advisors – These automated portfolio management services use algorithms to manage client investments. User benefits include lower fees and account minimums. Schwab and Vanguard are offering these services to their clients, and the trend continues to grow. Hybrid services combine computer automation and human input. Automation is not just for the millennials. As high net worth individuals invest more ($8 trillion by 2020), this alternative investment method will grow.
- Security – I love using my iPhone to pay for items! It’s not just a “cool feature.” Transactions through my iPhone provide end to end encryption of the data. Example: I don’t know what happens to my credit card when my waiter takes it. That’s an uncomfortable feeling! Data privacy and security have become a mainstream concern with financial technology. Organizations are implementing procedures to make sure clients know their assets and information are safe.
- Cloud Services – Data storage (e.g. – Dropbox, Google Drive, etc.) are a few examples of cloud computing. Cloud services such as VoIP (voice over IP) allow users to place calls over the internet and forward calls from the office to a cell phone. Skype and Google Talk are low cost solutions that increase advisor availability to clients. The low cost of technology puts the power of these solutions in the hands of even small offices.
Firms are responding by spending more on information technology, training and staffing changes. Sales, service and client communication are improving through the use of technology. Make sure your advisor team knows how to use your firm’s app and answer client questions. Innovation is not slowing down or going in reverse. Empower your advisors with the knowledge that will make them a better resource to their clients.
Scientifically Speaking, of course…