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Are FinTech Capabilities on Par with Investor Expectations?

Are FinTech Capabilities on Par with Investor Expectations?

How Wealth Professionals Can Continue Operating Successfully in a FinTech World

There’s no question the advisor/investor relationship is changing. And change in wealth management is expected–and inevitable–when one considers how rapidly information is generated and distributed in today’s fast-paced, highly-technological world.

The rise of FinTech, a term that blends “financial technology” to broadly describe 21st century technological innovations in the financial sector, has disrupted the investment and wealth management landscape.

FinTech has automated much of the investment management process, which many see as a threat to the need for and existence of human advisors. But FinTech is just one in a series of changes to the financial advisor model that have occurred over the years–from the introduction of no-load mutual funds to the advent of online trading.

Just as in the past, technology’s human counterparts can remain relevant if they simply adapt.

Does FinTech Deliver on Investor Expectations?

The short answer is, yes–and no.

FinTech encompasses many aspects of financial activity, from cryptocurrencies and banking to cybersecurity and insurance. For wealth professionals, the most profound impact of FinTech is automated investment advisory services, also known as robo-advisors.

The low fees and easy access of robo-advisor platforms like Betterment and Wealthfront are a draw. High-net-worth investors have also recognized the potential for automated investment services to add value to their portfolios by providing access to more complex investment vehicles or more advanced rebalancing than average investors would utilize.

But robo-advising is just one way FinTech is influencing investing. Many firms are finding success by implementing virtual communication practices, which allow them to offer the personal touch robo-advisors lack, while meeting investor demands for a connected, “always on” investing experience utilizing digital platforms.

In fact, a report conducted by McKinsey & Company showed 40% to 45% of high-net-worth clients who changed their wealth management firm in the past two years went to a digitally-led firm.

The evidence thus far points to a mix of personalization and on-demand investing as the way to truly deliver on investor expectations. And it’s clear that adapting to FinTech is unavoidable for wealth professionals who wish to continue being successful.

Resistance to FinTech is Futile

Interestingly, the prevalence of FinTech has also created a greater awareness of the demand for more personalized investment management services. Investors are increasingly looking to play a larger role in their investment activity, have immediate access to their information, and work with advisors who can provide trusted, customized services.

For this reason, investors are attracted to the streamlined, user-friendly, direct-to-consumer framework FinTech offers; as an automated service, it can rapidly evolve and respond to investor needs.

And the response from big industry players like Schwab and Goldman Sachs is evidence enough that there is something at stake. Many firms have doubled-down on their client-centric approach–while simultaneously partnering with FinTech services to round out their offerings.

And adopting automation for more routine financial tasks makes wealth professionals more available to truly engage with their clients.

  • Finance On-Demand:Wealth managers and advisors are now better able to meet investor’s increasing demands for financial information when and how they want it. Fulfilling this need can bolster an investors’ relationship with their advisor.
  • Increased Involvement: Replacing scheduled meetings with more routine, personalized investment updates can also increase an investors’ relationship with their wealth advisor.
  • Greater Relevance: Tech-savvy advisors report that they’ve realized higher AUM, are servicing more clients and feel their work is more fulfilling. There is a divergence between new and more traditional advising approaches, and the benefits of adapting to change often speak for themselves.

As wealth professionals, we must adapt to the changes FinTech presents to the investment landscape to continue being relevant to our high-net-worth clients. Technology will never replace the human touch; instead, it has done more to reinforce the importance of the personalized investing approach only a human advisor can deliver.

Existing in a FinTech world isn’t about resisting or continuing to follow the advisory model you’ve adhered to for years. It’s about using the change to your advantage to become more personalized and relevant to your high-net-worth clients.


Joseph W. Chase, CFA ®

Investment Manager

After graduating Summa Cum Laude from Suffolk University, Joe managed an equity portfolio for a single-family office, splitting his time between Miami, FL and Newport, RI. Joe joined Lake Street in 2012 and obtained his CFA ® designation in 2015, passing each exam on the first attempt. Outside of the office, Joe enjoys staying active and investing in real estate.



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