The financial services industry has grown through human interaction, but the last few years have seen an explosion of financial technology that has reshaped client-advisor relationships. In fact, a clearer future has emerged where client-advisor relationships are enhanced rather than eliminated by the efficiencies provided from emerging and established fintech.
In 2016 and 2017, there was a constant flow of headlines questioning whether fintech — more specifically robo-advisors — would “take over the world” and if the days of the human advisor were numbered. By 2018, the conversation shifted toward the importance of not losing the personal connection when offering financial advice.
In 2019, we will enter the third wave of financial planning. Advisors and financial professionals should be prepared for the changing landscape of client expectations and demands.
The first wave of financial planning was built around cash-flow-based planning, where advisors provided advice to clients via a financial plan. The second wave shifted to goal-based planning, in which advisors transitioned to a philosophy that placed less emphasis on the precision of cash flow calculations and instead focused more on meeting clients’ long-term objectives.
The third wave, which we believe will define 2019 and the years to come, will merge these two philosophies — cash flow and goal-based planning — as well as incorporate other fintech innovations. Advisors will be able to offer clients a more holistic approach, being more like a financial life coach than ever before. Further, advisors are better positioned now to leverage the inherent stickiness of financial planning as a practice while utilizing other digitized client touch points.