Transitioning to More Agile Wealth Management Utilizing Fintech

October 30, 2020

Technology and finance have always gone hand in hand. In the 1950s, Diners Club cards let people pay for their food without having cash on hand. Stock trades used to take up to a week to process until phone trading came on the scene, which was later replaced with online trading applications that make trades in milliseconds. If you sell a couch on Craigslist, you can accept payment through any one of a dozen phone apps that are just as secure as any bank transaction and far faster.

But financial technology (or fintech, as it’s often known) is starting to make its way into another area of the financial world: wealth management. For a long time, wealth management has stayed a little more behind the times when it comes to technology. Clients still prefer to meet with their advisors in person or call them on the phone, and they want to talk to a real person — not a computer that spits out recommendations.

That might be changing. Fintech’s improved efficiency and the proliferation of artificial intelligence tools are starting to make waves in the wealth management industry, and it’s worth paying attention to. Here’s what you need to know.

Robo-Advisors Aren’t Taking Jobs — Yet

When you call your bank or financial advisor’s office to get some advice on what to do with your money, you’ll still get a human being on the other end of the phone. Computer automated investment platforms have started to gain steam in the last decade, but they still have a long way to go.

The most useful function of a computer-automated investment platform is to manage money for people who don’t want to think about managing money. Platforms like Acorns and Fundrise allow users to invest in the stock market and real estate market respectively, but with almost no direct input. Customers simply deposit money, decide how aggressive they want to be, and leave it be.

For circumstances like these, a robo-advisor is a great idea. A computer can make broad, holistic decisions that benefit the largest portion of their clientele, based on hard data. The computer doesn’t have to weigh the priorities of the individual because they’re simply not relevant.

For a more involved investor, the personal touch of a human advisor is still irreplaceable. Let’s say you’ve been running a business for the last 40 years and you’re ready to retire. You want to know how to sell your business without paying it all back in taxes, what to do with the money you get from the sale, how much you’ll need to save for retirement, how much you’ll have left over, and how to set up your family to succeed when you’re gone.

Right now, a computer can’t possibly take all that into consideration and give you actionable information about how to handle your wealth and your priorities. Even if you can find a computer program that can tell you the “best” option for your money, it can’t explain how it came to that decision or what your alternatives are. Most importantly, it can’t take into account your values — investing in energy companies might make financial sense, but you might object for moral reasons. A human financial advisor can create a plan that you feel good about and works for you.

Advisors Will Adapt

For all we’ve said about how computers aren’t ready to take over from human advisors, there’s a middle ground that’s likely to gather significant steam: advisor-computer partnerships. Today’s financial advisors are well aware of the speed of change around them. They know that it’s easier than ever for their clients to find information online, move money around, and compare their options. They know that they have to keep their edge, and technology is the way to do that.

Artificial intelligence tools will be a huge factor when it comes to combining technology with good old-fashioned intuition. Customers aren’t simply going to take your word for it when advisors tell them where to put their money anymore — they want to know that recommendations are backed up by data and analytics. Customers will prioritize firms that use the technology that’s available to them, and firms will need to keep up.

What Fintech Means for Clients

If you’re in the market for wealth management services, you’re looking for an organization that communicates well, has a proven track record, and is someone you can trust with your money. When it’s implemented correctly, fintech can provide a huge boost to all of these factors, keeping you abreast of what’s going on in the financial world and how it’ll affect your investments.

If you’re ready to start taking your personal finance needs seriously, it’s time to talk to First Western Trust Bank. We’ve been in the financial industry in the western United States for decades now, and we have the experience and expertise to advise you, no matter what your goals or priorities may be. It’s time to work with a firm that will give you a holistic, personalized view of your finances, not a cookie-cutter approach. Learn what it means to trust where you bank by scheduling an appointment with one of our experts.


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