In today’s ever-evolving financial landscape, financial advisors and their clients seek ways to establish and maintain long-term financial stability. As financial complexities increase, so does the demand for advisors who can guide clients toward long-term financial stability. Enter automated financial technology, revolutionizing how advisors operate and serve their clients.
Automated financial technology is a game-changer for advisors, enabling them to serve their clients better and efficiently manage their practices. The financial advisory landscape is transforming in an era of rapid technological advances.
Without exception, advisors anticipate increasing their core technology use over the next two years, with significant growth expectations in marketing/prospecting technology, risk analytics, rebalancing, and financial planning.1 A recent study by ISS Market Intelligence (ISS MI) revealed that more than 95% of surveyed advisors are using fintech for trading and clearing, portfolio rebalancing, and/or investment analytics. Many RIAs and wealth managers need more time to fulfill their daily tasks and scale their businesses. They need technology to manage tasks that consume significant portions of advisors’ time.
Here, we delve into the importance of automated financial technology in empowering financial advisors to help clients build a solid foundation of financial security for the future while growing their practices.
Delivering long-term financial stability
Long-term financial stability is the cornerstone of a prosperous and worry-free future. It isn’t merely about amassing wealth; it’s about ensuring financial well-being throughout various life stages and economic uncertainties and unexpected events.
From buying a home to planning for retirement, individuals face many decisions that can impact their financial futures. Financial advisors play a pivotal role in guiding clients through these complexities, and automated financial technology has emerged as a critical ally in making the following more efficient.
- Comprehensive financial planning: Through automated financial technology, advisors can work with clients to develop holistic, accurate, and personalized financial plans by gathering and analyzing vast amounts of data efficiently. It’s no wonder that 54% of advisors plan to invest in financial planning technology in the next year.
- Risk management: Managing risks effectively is crucial to long-term financial stability. Advisors use technology-driven risk assessment tools to identify potential risks and develop mitigation strategies; whether for insurance coverage for unforeseen events or diversified investment portfolios, technology aids in crafting resilient financial plans.
- Investment strategies: Helping clients navigate the complex world of investments by designing portfolios that align with their risk tolerance and long-term goals is crucial. Technology platforms can optimize investment choices and rebalance portfolios, ensuring they remain aligned with clients’ objectives despite market fluctuations.
- Tax efficiency: Tax implications can significantly impact one’s financial stability. Advisors leverage technology to analyze tax implications and strategize tax-efficient investment and withdrawal strategies, ultimately preserving more of their client’s wealth.
- Estate planning: The next generation of investors will receive the most significant wealth transfer in history in the coming years. Planning for the transfer of wealth and assets is vital for ensuring financial stability across generations. With technology, advisors can use householding techniques to generate more holistic client conversations, preserve intergenerational wealth, and tailor portfolios.
Financial technology as a growth tool
Automated financial technology can play a valuable role in helping financial advisors build their long-term financial stability by automating tasks such as client onboarding, portfolio management, rebalancing, trading, and reporting. It can free up advisors’ time to focus on providing more personalized service to their clients. Technology can also help advisors improve their efficiency and productivity, leading lead to several main benefits that lead to growth and a better bottom line, including:
- Efficiency and accuracy: Traditional manual processes can be time-consuming and prone to errors. Automated financial technology streamlines data collection, analysis, and reporting. This efficiency allows advisors to focus on strategic planning and personalized client interactions.
- Data insights: Automated tools gather and process data from diverse sources, providing advisors with a comprehensive view of their clients’ financial situations. These data-driven insights enable advisors to make informed decisions and develop strategies tailored to clients’ goals and circumstances.
- Investment management: Technology can help remove complexity across the investment management process, which is critical to optimizing efficiencies, growth, and client outcomes. Outsourcing is also a great option to give advisors more time in their day and the ability to grow and scale faster.
- Personalization: Technology enables advisors to offer personalized financial solutions, such as customized financial plans and investment portfolios that reflect clients’ specific aspirations, risk tolerances, and time horizons.
- Risk management: Identifying and mitigating risks are fundamental to financial planning. Automated financial technology equips advisors with advanced risk assessment tools to model various scenarios, helping clients prepare for unexpected events and volatile market conditions.
- Continuous monitoring and rebalancing: Building financial stability is an ongoing process. Automated rebalancing and trading tools can monitor clients’ financial portfolios and adjust strategies. This adaptability ensures clients remain on track to meet their goals, even in a dynamic financial landscape.
- Client onboarding and engagement: Automated platforms can help advisors collect and verify client information, saving time, reducing errors, and offering clients real-time visibility into their financial progress. This empowers clients with information and fosters better communication and engagement between advisors and clients.
- Compliance and security: The financial industry is subject to strict regulatory standards. Automated financial technology assists advisors in maintaining compliance by automating documentation, record-keeping, and reporting while enhancing data security.
Building a resilient financial future
Long-term financial stability requires careful planning, strategic decision-making, and expert guidance. Financial advisors serve as navigators on this journey, offering expertise and support to help clients build resilient financial futures. Automated financial technology amplifies advisors’ capabilities, enabling them to provide more accurate advice, personalized strategies, and efficient services.
As the financial advisory landscape continues to evolve, embracing fintech is no longer just an option – it’s necessary to guide clients toward long-term financial stability with greater accuracy and efficiency in an ever-changing world.
Source 1: State of U.S. Wealth Management Technology 2023: The Technology-Enabled Advisor, Cerulli Associates