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What is the Future of Financial Advising?

The financial advising industry is undergoing a major transformation as technology continues to advance. 

People say that Artificial Intelligence (AI) is the foundation of future business. But does it fit financial services? Does it support financial services’ business models of the future?

One of the most significant changes has been the rise of robo-advisors. These digital platforms use algorithms to provide automated investment advice and portfolio management. But the human touch must remain prevalent to reach the best results.

In this blog post, we will explore the future of financial advising and robo-advisors, including how they are changing the way we invest, the benefits and drawbacks of using them, and what we can expect from the industry in the coming years.

The Robo-Advisor Debate

There is ongoing debate about the future of financial advising and how it will evolve in the coming years. Some experts predict that technology will play a larger role in financial advising, with the use of robo-advisors and other digital tools becoming more prevalent. At the same time, there is also expected to be a continued demand for human financial advisors who can provide personalized advice and support to clients.

Client trust is the most important metric for financial firms, especially in today’s volatile market. While robo-advisors excel at gathering data, savvy financial advisors need to be at the helm. And considering how ubiquitous money is in our everyday lives, that data should be coming from every direction.

Everything from customers’ hobbies to their social circles, favorite foods, and even health routines are factors in providing investment advice. A cross-platform approach that combines contextual data, public data, and proprietary analysis is key, and if your firm isn’t already investing in this type of technology, you’re behind the curve.

With so many options out there today, it’s easy for clients to get lost in all the noise. But when it comes down to it? They just want you to care about them as much as people.

The Hybrid Model 

We know that the future of financial advising is going to be shaped by a mix of tech innovation and human advisors.

One trend that has already begun to emerge is the use of hybrid models, which combine the use of technology with the services of a human financial advisor. In these models, clients may have access to digital tools and resources for managing their finances, but can also work with a human advisor for more complex financial planning and decision-making.

Obtaining customers’ trust and loyalty requires more than just a digital and automated approach. Interestingly, customers seem to crave a human touch and believe in higher added value in portfolios where financial services providers offer a combination of digital and traditional services. Simply put, full automation does not lead to more customer loyalty and trust towards financial services providers.

Moreover, customers understand the value of data and are willing to share it to receive benefits in return. For instance, 38 percent of all customers⁠—­against 46 percent of Generation Y customers⁠—would use digital platforms to take investment advice, while 78 percent of customers are open to receiving automated support about investment advice.

Investing in AI systems does not mean relying on them completely, there is always a need for the human touch as well.

Last Thoughts

Ultimately, robo-advisors have their limitations. The emergence of robo-advisors, in conjunction with demographic changes, suggest that this industry will be going through some significant changes over the next few years. Those firms that are able to adapt quickly to changes stand to make the most gains, while those that fail to do so risk being driven out of business or forced to undergo a major restructuring.

Digital innovation within the financial service industry is inevitable, companies must focus on digitally enabling their workforce, not just automating self-service. AI’s place in the enterprise is increasingly significant and useful, but it will never be capable of replacing the value of the human touch.

At Onimod Global, we specialize in digital marketing for financial firms. From content creation, webinar marketing, SEO and much more, we understand the need to keep up with technology trends in the digital marketing space. In fact, our President and CEO, Aaron Domino, recently gave a presentation in downtown Denver, CO about financial advisor trends and how they can affect your financial firm’s outlook.

If you’re interested in learning more about the future of digital marketing in the financial industry, contact us here.