FinTech Apps Are an Advisor’s Ally, Not a Foe

By Pat Spencer, managing director for Moneytree Software

Pat Spencer, managing director for Moneytree Software

The rising popularity of fintech apps in 2022 will influence the relationship between financial advisors and their clients. As such, advisors will do well by recognizing apps for what they are — just tools. Used well, apps can inform, educate and build loyalty. But pitfalls await those advisors who either ignore the tools or put too much stock in them.

There is no denying how prevalent such apps are becoming in the daily lives of people. The percentage of U.S. consumers using fintech surged to 88% in 2021, according to an annual report by fintech startup Plaid. Fortune reported usage was only 58% a year earlier. More Americans now use fintech than they do video-streaming subscriptions (78%) and social media (72%), according to the Plaid report.

What this means for advisors is that fintech is defining expectations for people when they bank, make payments and invest. Advisors need to build their familiarity with the technology. They don’t necessarily have to be an expert with Robinhood, Coinbase or similar offerings, but they should know such apps exist and how they work. The “why” behind the use of an app can prove insightful in better understanding a client.

How the use of fintech apps gives client insights

Clients may use apps to better understand investing. They may use apps for ease of use. They may use apps because they want more transparency in where their dollars are invested.

The Plaid survey said 93% of respondents said apps helped them save time, while 81% said apps gave them more control over their finances and 78% said apps helped them save money.

Whatever the reason, the choice gives insight into the client’s wants and needs. Advisors need not frown upon fintech apps as some technological competitor but view them as another means to better understand their clients.

Now more than ever advisors need to know their clients well. Clients are not just concerned about portfolio performance anymore. Amid the pandemic, which forced people into spending so much more time at home, many clients are rethinking their path to retirement and what retirement itself should entail. How people lived, how they worked, how they spent their time, what they valued all changed — or at least evolved.

Now, people might want to start tackling their bucket list rather than waiting until they quit working. Other priorities, too, may have shifted. How well advisors can adjust to this new dynamic can demonstrate how much they care about their clients and build loyalty.

No number of fintech apps can replace the experience and knowledge of a financial advisor. But they can complement the relationship. As counterintuitive as it sounds, apps can help build upon the personal experience.

Wealth management technology and the importance of user experience

Consumer apps are one way in which fintech will increasingly influence the relationship between client and financial advisor. Another area involves the wealth management technology advisors use themselves. Apps of all stripes are helping to set user expectations. The challenge for financial advisors is to better meet those expectations.

Although wealth management firms invested heavily into upgrading their apps last year, they still lagged other industries in terms of user experience, according to a J.D. Power app satisfaction study. Overall customer satisfaction improved from a year ago, particularly in terms of speed, range of services offered and overall appearance, but wealth management still trailed rankings for apps in the banking, credit card and insurance industries.

The takeaway for financial advisors is to choose their technology investments wisely. Advisors already are juggling eight to 10 platforms. Whatever their technology investments are, they should be sure they serve the needs of their clients as well as their own. Is the calculation engine robust but also highly visual? Does the solution easily aggregate other accounts? Is the client-facing user interface intuitive and easy to use? Is access seamless whether desktop, online or mobile? Are client reports transparent enough so clients can easily see where the data comes from in making projections? Can the advisor easily create a customizable report that provides a real-time synopsis of the key elements of each individual client’s financial plan?

Be wary of apps that overpromise the next big thing. A client may not want a text-heavy 10-page report, but advisors spending hours to create a custom video through an app’s video editing software may not be prudent either. Don’t pay for what you don’t need.

Whatever the app, how it facilitates communication between advisor and client is key. But realize that one size doesn’t fit all. Communicating through a mobile app might be preferable for many clients. Still others may want to video conference. And others might want a regular email and an office visit. Most prefer a number of touchpoints. Advisors should track how their clients prefer to receive communications — and not just by what platform. Some clients are more detail-oriented and appreciate a lengthy report. Others are more visual and appreciate graphs and charts. Offer multiple channels and multiple approaches to best meet the needs of your clients.

“The key for wealth management firms to level up in this competitive environment is to heavily lean into their unique value propositions, making it easy and intuitive for investors to move seamlessly between the app and other digital or human channels, while delivering personalized guidance and important information along the way,” said Amit Aggarwal, senior director of digital solutions at J.D. Power.

Fintech apps help consumers gain better insight into their own banking, budgeting and investing habits. The technology helps financial advisors, too. By clearly understanding what their clients seek in an app experience and tailoring their own interactions to best meet those experiences, advisors can build stronger relationships with their clients.

About the author:

Pat Spencer is managing director for Moneytree Software. Moneytree is a software development company with 40 years of experience in developing useful financial planning solutions. Moneytree works collaboratively with thousands of advisors across the country to help them confidently manage the financial journey of their clients. Moneytree was acquired by Accutech Systems Corp. of Muncie, Indiana, in 2019. Accutech has over 34 years of experience building innovative trust and wealth management solutions and provides exceptional personalized service to over 200 banks and wealth management companies nationwide.