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Four Reasons Financial Advisors Must Embrace Technology

StratiFi Technologies Inc

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Why Financial Advisors Should Embrace Tech

The future is now. Financial advisors who can see it, and grab it, have an advantage over their competitors. While it is popular for some financial advisors to lament the rise of robo-advisors, the fact is that robo-advisor firms control a sliver of the trillions of dollars held by traditional asset management firms. But the robo-advisors are often at the forefront of the industry even though it may not seem that way. These tech-savvy firms are increasingly leading the way forward for the financial advisor industry, capitalizing on technological innovations and expectations that are common on Main Street but still not widely implemented on Wall Street. The trend and pressure will keep increasing. Each year, billions of dollars in venture capital are flowing into the financial technology sector. A tipping point is approaching. Soon, financial advisors will have to choose whether to fight the technological onslaught or learn to adopt fintech solutions so that they can keep up with competitors and  better serve their clients.

Clients Leading the Charge

The bottom line to all of this is that clients want tech-centric experiences in all aspects of their lives. This is expectation is currently in the process of spreading through the financial advisor industry, but every indication suggests it will accelerate. Just consider how much has happened in such a short time. The two leading robo-advisor firms, Betterment and Wealthfront, started as direct-to-consumer investment platforms in 2008. Through the end of 2018, Betterment had more than $16 billion in assets under management, and Wealthfront had $11 billion. Both companies tend to serve younger investors, primarily in the millennial age group, who are attracted by the self-serve digital platforms. However, both companies are beginning to develop a sizable following of older adults, including baby boomers.

Although financial advisors managing the assets of ultra-high net worth individuals are unlikely to feel the full impact of robo-advisors, they need to prepare for the coming transfer of more than $30 trillion of wealth to millennials that is expected to occur over the next 20 years. If advisors expect to get any part of the greatest wealth transfer in the history of the world, advisors should embrace technology. Betterment and Charles Schwab recognize this need – and opportunity. The companies now offer digital advisor platforms that mimic the direct-to-consumer platform for automating advice, but they include a financial advisor as an intermediary in the process. In fact, some feel this hybrid model will become increasingly popular.

If You Can’t Beat Them, Join Them

Technology has changed how people view the world, and interact with the world around them.  Now, everyone expects everything that they do will be like ordering from Uber or Amazon.com: quick, easy and transparent. These forces are increasingly reshaping the financial advice industry, and any advisor who fails to embrace fintech is likely to be left behind.

Yet, advisors who adopt automated, digital advice can help advance their practices. Robo-advice will never replace the human interaction that is required for more complex financial planning. Financial advisors who offer an omni-channel solution, in which clients can opt for self-directed, advisor-assisted and advisor-driven engagement, all on demand, stand the best chance of capturing the assets of millennials and anyone else who prefers to have options.


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Financial technology helps advisors scale their business and improve processes.  Fintech companies deliver back office and client-facing solutions that streamline many processes, including onboarding clients, managing portfolios and compliance and providing client portals. Financial advisors, who work with many of the larger asset management firms that are investing in or acquiring fintech companies, will see their platforms incorporating many of these solutions. However, the fastest growing segment of the advisory industry – independent financial advisors – need to be proactive. Those advisors must be able to compete with the  technological tools and scale of the big firms if they are going to compete and survive. Fintech can help level the playing field. Several of the largest custodian firms, such as Schwab and Pershing LLC., are developing or investing in proprietary fintech solutions, including a robo-advisor platform for financial advisors.

Harnessing the Power of Big Data To See What Others Cannot

One of the biggest contributions that fintech offers advisors is the power to harness, analyze and produce refined reports based on massive volumes of data. Financial advisors can leverage big data for more efficient and effective prospecting, enabling them to more precisely target markets and better utilize information to engage their clients and prospects. On the investment side, big data analytics provide advisors with the ability to better forecast market trends and to more deeply analyze the impact of macro events on investment portfolios. Many investors are already seeking out this kind of technology, and this all but guarantees that the trend will accelerate.




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Akhil Lodha Author
Co-founder & CEO StratiFi Technologies

Building the industry standard for understanding portfolio risk through cutting-edge technology at StratiFi.

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