While it’s clear that technology for personal finance has shifted in ways we couldn’t have predicted three decades ago, the foundation of success in our industry relies on one thing, and it’s old-school: solid financial planning.

The tenets of spending less and saving more, developing comprehensive financial plans and creating long-term goals remain. However, the experience advisers deliver to their clients to help them accomplish their financial goals is an entirely different story. If you look back at financial trends over the years and study how they have challenged advisers to rethink the client experience, you’ll see some interesting parallels to the fintech space today and where it’s headed.

In 1986, I graduated from Stonehill College in Easton, Mass., with a degree in computer science. I had plenty of people try to steer me away from the major at the time. They thought computers were a passing phase and that my career shouldn’t be tied to an industry so new and unpredictable.

Although I’m guilty of at one time questioning why anyone would need more storage than the 10-megabyte hard drive the IBM XT provided, I was confident then that computers were not going anywhere and that my knowledge of programming, coding and data structure would serve me well as I entered the job market.

"Today, technology isn’t an option for advisers," says eMoney Advisor CEO Ed O'Brien. "It’s an integral part of how they do business because their clients expect it." Image: Bloomberg News
"Today, technology isn’t an option for advisers," says eMoney Advisor CEO Ed O'Brien. "It’s an integral part of how they do business because their clients expect it." Image: Bloomberg News

Sure enough, the number of computers in use in the U.S. exploded from just 3 million in 1980 to 51 million by the end of the decade. Meanwhile, computer and data-processing services became the fastest-growing industry in the U.S. over that period, adding nearly half a million jobs, according to the Bureau of Labor Statistics. Most notably, computers helped transform the mutual fund industry, automating the buying and selling of fund shares, and enabling businesses to reduce costs and scale rapidly.

During this same time, funds were being marketed to consumers with control being put in their hands. Thanks to touchtone phones, anyone could buy or sell a mutual fund without the assistance of a broker, and guess what was needed to make transactions possible? Mainframes. Turns out, computer science was here to stay. The early stages of a fascinating, long-lasting relationship between financial services and technology were just beginning to blossom -- suffice to say they didn’t stop.

The newly established pastime of surfing the web in the 1990s further fueled clients’ desire to be involved in their own financial planning. And a wave of new dot-com companies piqued their interest. Stock trading went online, and its popularity soared as more people took advantage of faster Internet connections and more affordable high-speed computers. Between 1995 and 2000, the percentage of Americans who used the Internet rose from 14% to 46%, according to Pew Research Center Surveys.

With technology giving people outside the financial services industry the ability to make transactions, advisers and brokers initially viewed it as a threat (sound familiar?). However, like any worthy competition, technology forced advisers to up their game. While they may not have fully appreciated it at the time, it was technology that forced advisers to ditch the sales mentality and evolve their practices to provide more comprehensive financial planning services! Technology forced us to get better at what we do best, as professionals. It continues to push us.

Like any worthy competition, technology forced advisers to up their game.

The days of building a plan and putting it in a binder on a shelf were over. Clients wanted to know more, learn more and understand more about the big picture of their financial plan, and it was advisers’ responsibility to educate, engage and build trust. Clients had a wealth of information at their fingertips and expected their advisers to successfully manage their money and, ideally, earn them more in the future. The topic of client-adviser conversations turned from focusing on products and returns, to planning, goals and progress. As a rather ironic result, this meant advisers’ technology needs were growing, too.

It’s during this time that I believe the most successful advisers started to realize the benefits technology could provide to their practices. They could either embrace technology and swim, or fear it and sink.

Today, technology isn’t an option for advisers. It’s an integral part of how they do business because their clients expect it. A third of investors in a recent Fidelity survey said they would switch away from their advisers if they weren't active technology users, while 89% of high-performing advisers surveyed said they are active users of technology.

From apps to live chats to the recent barrage of robo advisers, people seeking financial guidance rely on technology to get it. They also expect to be questioned, consulted and personally involved in their financial planning process. It’s the adviser’s duty to address clients’ ever-changing needs and offer innovative solutions to provide an experience that surpasses expectations. And while innovation is constant, it doesn’t have to be a breakthrough every time. Small, continuous improvements are essential to success.

Digital Wealth Disruption: The Competition Evolves
Automated wealth tools and platforms are gaining traction. But expensive ad fights for what still is a sliver of the overall investment market has observers wondering which digital-first firms can survive and become profitable.

In 2014, the total number of financial advisers in the U.S. increased by 1.1%, the first increase in nine years, according to a recent report by Cerulli Associates. The need for a competitive advantage is real, and the technology an adviser is using can make or break a deal, especially as shifting regulatory requirements make resources even more strapped and crucial to survival.

If advisers lead with solid financial planning and let technology bring it to life, they’ll reap longevity of client relationships as a reward. After working with hundreds of advisers over the past 30 years and understanding their needs, I know for a fact that financial technology makes client relationships thrive and deepens trust.

To put it simply, fintech is in its prime. McKinsey estimates there may be as many as 12,000 startups now offering traditional and new financial services. Since 2010, more than $50 billion has been invested in nearly 2,500 companies, according to a 2015 report by Accenture, and innovation in the space is expected to accelerate as more money pours into the sector.

Globally, it’s an exciting time for fintech; however, earning this status in no way means it’s all downhill from here. Innovators in the space must look beyond quarterly profits and continue to partner with advisers to help them prove their value.

Fintech companies and advisers alike must strategically anticipate client needs and focus on the client experience without sacrificing the foundation of sound financial planning. Technology ensures this is possible, and the potential is without limits.

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