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As technology disrupts the financial advice industry – what does the future look like?

Posted February 7, 2018 by MoneyLink

All industries are evolving through the application of technology, and the financial advice industry is no different.

As technology-based platforms gain media attention because they have ‘lower operating costs’ and are accessible 24/7 from a smartphone, that’s pretty much all this technology has to offer over financial advice provided by an experienced and qualified human financial advisor.

The role of the financial advisor is changing

The role of the financial advisor is changing, no doubt. In line with technical advancements, advisors have access to more information in real time than ever before.  Changes to portfolios can be made quickly and efficiently. Clients can be communicated with electronically and securely, wherever they are.

And all of these advancements have added a level of sophistication and efficiency to the service that financial advisors can provide. In many ways, it has freed advisors up to focus on what they need to do – provide exceptional value for service. And by that I just don’t mean delivering solid and consistent returns – that is to be expected. I mean taking time to know each of their client’s personally and in-depth, in order to be able to provide solutions and advice in any circumstances.

Why you need a financial advisor

Most Australians are quick to seek help. When we need to lose weight and get fit…. we find a personal trainer. When we want to advance our careers, we get an executive coach. When we’re strung out, we seek yoga instructors and mindfulness coaches.

But so few Australians see the value in having a financial coach too – someone who can help you figure out how to get where you want to be, with the resources that you have.

Financial advisors don’t just help you save money so you can die rich. Indeed, they should be helping you to create wealth, and to manage this wealth and make sound financial decisions for now and the future. Your advisor should be providing you with holistic advice across a number of areas – investments, savings, superannuation, mortgage structures and insurances to name a few.

The big picture

This kind of relationship requires a deep level of trust and will work it’s best (by delivering positive results you can measure on your personal financial bottom line) when it is built on rapport and a person-to-person connection.

While the new technology changing our industry might be able to help you ‘plug in numbers and get an answer’, even the best artificial intelligence does not have the capacity for understanding human nature.

For example, you can tell a software programme you’ll save $1,500 every month, it will give you options for how to double that, or triple it. So too, will a human financial advisor. But the critical difference is that a human advisor is going to be more realistic about your savings goals and the fact that the best laid plans can sometimes go astray.

Flexibility and adaptation are human qualities that can not be found in a machine.

What’s more – financial management at a personal level can be complex: Superannuation regulations, tax changes and their implications, mortgage rates – these all have an impact, and a good financial advisor will provide prudent advice when it’s time to consider changes and ensure compliance.

When technology has huge benefits

Technology-enabled applications do have a great role to play with the generation we call ‘Millennials’. This group of people are now at a time in their lives where they are beginning to make financials decisions about their future. But the interesting thing about Millennials is that they have grown up with the internet and have high expectations of its functions, and a great deal of faith in its applications. Research also tells us they prefer not to act with other humans in a lot of cases – banking, and shopping are great examples. Millennials make up 91% of Australians who’ve used self-service checkouts, and more than 25% say they use them because they prefer not to talk to the cashiers.

What we also know about Millennials is that they’re savvy. One particular survey found that most millennials stick to a budget, spend hours researching their purchases, and are more inclined to spend their own money than use a credit card. New technology has a real role to play in assisting Millennials to improve their financial literacy and better understand their options.

The future of financial advice

In my view – technology should be harnessed as much as possible – it provides an ongoing basis of improvement across all areas of our industry. The role of the financial advisor, both now and into the future, is to use technology to enhance the client experience so that no matter what a particular client’s needs are, they can be delivered in a range of ways – through personal interaction, web transactions and smartphones, to ensure that clients get a high level of service, no matter if they choose to interact in the traditional way with a personal appointment, or across a digital platform.

MoneyLink Financial Planning Pty Ltd is an Australian Financial Services Licence Holder. No:.247360

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