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Delivering Value From Fintech

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Access to great technology is no longer the differentiator it once was.

Financial advisors who had this access and were early adopters once held a competitive advantage over their peers. Today, however, the democratization of innovative technology is starting to level the playing field. A major driver of this evolution has been a seismic shift away from a focus that had traditionally been on asset management to more holistic financial planning.

(Related: Allianz Steps Up Venture Investments in Insurance Startups)

Advisors once feared that the advent of robo-advisors could cause massive disintermediation, but advisors have quickly learned how to take advantage of this technology to create more efficiencies within their practice(s). This has also enabled financial advisors to plan more confidently and create better potential outcomes for their clients. Now that access to this technology is no longer a differentiator, the bigger risk lies in not fully adopting and properly utilizing what is available at an advisor’s fingertips.

It goes without saying that 2020 has reinforced the significant role of technology in cultivating and enhancing the client relationship, particularly for independent RIAs. In 2021, 81% of firms expect to increase their tech budget by more than 5% from 2020, according to F2 Strategy Research. Independent RIAs spend more money per capita on technology than the wirehouses and banks, but often struggle to deploy and implement it, which means many firms are spending a lot of money on technology and not getting much benefit from the investment. They are not using the technology in a manner that results in many benefits for their clients.

Tech savvy carriers can help RIAs so that they can better utilize the latest technology in a much more effective way.

Insurance carriers and other product and service providers are an important partner for advisors as they navigate the ever-growing market for fintech and insurtech solutions.

So what should advisors look for from their insurance carriers and other providers?

Here are four ideas.

1. Seamless Integration

An important prerequisite for advisors looking to successfully leverage constantly evolving fintech products is having all available investment solutions seamlessly integrated in their broader tech stack.

Over the past few years, fintech providers and platforms have been accelerating their insurance capabilities and connectivity to meet the growing demand for risk management products, like annuities, from RIAs. As insurance carriers and other providers develop product solutions to meet financial planning needs, it’s essential to provide connectivity with advisors’ core interfaces, including their custodial platform, portfolio management and CRM tools. This effortless integration is key, as these applications serve as the foundation of how advisors run their business. In addition, the integration eliminates many inefficiencies and possibilities of increased errors as a result of having to switch between multiple systems.

2. A Focus on the Client Journey

In the future, insurers and providers will be tasked with the important role of supporting independent RIAs to further the ultimate goal of improving client outcomes. Insurance carriers are increasing their focus on how to better use technology to the benefit of their clients. While the advisor is always going to be the integral player in guiding these conversations with the client, it’s the responsibility of insurers and other product manufacturers to empower advisors in this process by giving them easy to use access to the latest technology.

3. Leadership in the Risk Management Renaissance

Technology has helped advance a core tenant of the insurance industry: risk management.

Risk management has entered a renaissance because of a confluence of factors, but technology has also made it easier for advisors to access, evaluate, implement, and deploy risk management solutions for their clients. Advisors should look to partner with insurers adept at the insurtech and fintech solutions that advisors are actually using so they can improve both the client and advisor experience.

4. Strategic Guidance and Expert Support

One of the biggest challenges facing advisors when it comes to technology investments is knowing how to fully optimize the tech solutions at their disposal. Insurers and other providers should employ a team of fintech consultants and professionals available to help advisors and their paraplanners model products in actual financial plans and quantitatively demonstrate their impact. Some insurers have already put teams in place and have experience facilitating this crucial function. Fintech professionals are a great resource and advisors should consider the access to such support personnel when considering their partners.

Looking ahead over the next decade, there will be winners and losers when it comes to tech adoption, and unfortunately some will be left behind. Those who adopted early are uniquely situated in the marketplace and COVID-19 has certainly sped up this process. For advisors exploring a new insurance carrier or other product/service provider, it’s important to evaluate their fintech offerings and expertise to ensure you’re staying ahead of the curve.

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Heather Kelly Heather Kelly, CLU, ChFC, RHU, HIA, MHP, is senior vice president and head of advisory and strategic accounts at Allianz Life.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.