The Future of Financial Fitness
As we move past 2017 and move forward with 2018, a question everyone asks in one capacity or another is: “What’s next?”
In industries of fintech and financial advice, like so many others recently, the answer seems to rely on the massive amounts of data to which consumers now have access. With more information than ever at our fingertips and ample online resources to see personal financial data, many people are seeking out advisors to help them understand their financial position. Advisors must be in touch with the latest data, apps and communication channels in order to engage with their consumers. The industry overall is transitioning from investment management to financial planning, with advisors at the forefront doing more for more people.
To put this into perspective, I like to compare this phenomenon to the physical health and wellness surge we’ve seen over the past few years. Why? The key is instantaneous access to personal data and information. More and more people are using technology like Fitbit, Apple Watches and apps to access information like their caloric consumption, activity levels and dietary needs based on the wellness goals they set for themselves. With the help of a nutritionist, doctor or trainer, consumers can then interpret the data and put action steps together in order to reach their goals. And it’s really not too far off to apply this same line of thinking to financial services.
What will happen now that consumers have more financial data than ever?
- Data can empower financial advisors to help consumers make smarter financial decisions
With more data available, clients will increasingly opt in to share not only their savings data, but data related to their spending, debt and giving. Consumers will look to advisors to be financial coaches and show them their reality versus their perception (like how much they think they’ve spent compared to what they actually spent). The bottom line is that there is truth in data. When faced with that truth and reality, advisors should help their clients create more holistic plans that are constructed based on what is seen in the data, which will drive better behavior for consumers.
Some consumers may try the “DIY approach” to their financial data with apps and blanket forms to gauge their financial stature, but they may achieve greater success working with a professional. I like to compare the financial DIY situation to using WebMD instead of seeing an actual physician. It might get it right sometimes, but customized advice can be the best route.
- Professional financial advice will be accessible to more consumers – not just those with high net worth
Technology is also changing who is seeking out financial data and advice, and opening the gateway from consumer to advisor. More and more millennials, women and high-earning-not-rich-yet (also known as HENRYs) are looking for financial advice at different stages in life than what traditional advisors might be used to. Advisors need to be prepared to communicate with and advise the changing consumer face.
- Consumers will see the face of financial advice change
It goes both ways! A new generation of financial advisor is entering the work force. In the coming years, advisors will become more diverse, younger, and won’t solely focus on statistics and accounting – and they will incorporate the human aspect of financial advice. They will also take on new roles as relationship managers, relying more on machines and technology to work their algorithms, tax-sensitive investing and rebalancing. Envestnet continues to look for ways to recruit this demographic through the Envestnet Institute on Campus, which provides information on financial services jobs to college students looking for career opportunities. The EIOC program will be important in recruiting young, diverse talent to the industry in the coming years.
With this influx of technology and the ever-changing nature of investors across different demographics, financial advisors are faced with the difficult task of providing tailored advice to a variety of individual experiences. But as long as they’re open to embracing that technology and the data it has to offer, advisors are well positioned to offer advice to investors that can truly make an impact.
Envestnet, Inc. (NYSE: ENV) is a leading provider of intelligent systems for wealth management and financial wellness. Envestnet’s unified technology enhances advisor productivity and strengthens the wealth management process. Envestnet empowers enterprises and advisors to more fully understand their clients and deliver better outcomes.
The opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities, or investment advice or a recommended course of action in any given situation. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon, and risk tolerance. Information obtained from third party resources are believed to be reliable but not guaranteed. This paper may contain ‘forward- looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this paper is at the sole discretion of the reader.