FinTech firms are increasingly making an impact on the asset management landscape — but what specific forces are driving this disruption, and where will they lead the industry? Members explored this topic during an interactive educational clinic held at Nicsa’s latest SLF event in February of 2020, moderated by Dennis Gallant, Senior Analyst at Aite Group, and featuring leaders from Fidelity and Financeware.
"The Achilles heel for any retail advisor is his or her capacity, both in time and knowledge,” Gallant said. “If you're advisory based, if you're offering financial planning, there are only so many clients you can provide those services to — so advisors are seeking out new ways of expanding their business.”
In turn, they are reinventing their roles.
“At the end of the day, investment management is becoming a smaller and smaller piece of the business,” Gallant said. “Few advisors are ‘baking the cake from scratch,’ so to speak, in building out their investment portfolio, and underpinning all this disruption is digitalization in all of its forms.”
Tricia Haskins, Vice President, Digital Strategy and Platform Consulting at Fidelity, agreed.
“One of the major trends we’re seeing is the changing role of the advisor — what was once focused on choosing stocks and mutual funds is moving to more of relationship orientation,” she said. “What we call that at Fidelity is the advice value stack.”
That value stack suggests that advisors start by managing their clients' money, build upon that to help clients achieve their goals, ensure they are free from financial worry, and then, ultimately, help clients find fulfillment and actualize their dreams.
“Technology is absolutely helping advisors move up that value stack, which creates a tremendous amount of opportunity when they find that their unique value proposition isn't necessarily managing the money.”
Will Dolan, Chief Executive Officer at Financeware, said that it’s important to keep our eyes open to the latest innovations, but changes will happen incrementally with a forward-thinking approach and strategic planning.
“We’re not looking to create the next Uber,” he said. “That takes a lot of money and a lot of risk. We want to make sure that we’re prepared for what’s coming at us, but only if it’s relevant to our industry, our value proposition, and our customers.”
The group also discussed how robo-advisors are disrupting the wealth management industry, with Haskins commenting that instead of taking over the businesses, she believes robo-advisors ultimately help advisors scale their businesses as the needs of end clients become more complex.
Gallant said the rise of the robo-advisor has contributed to consumer empowerment. “Customers now have more insight, more knowledge,” he said. “You don't go to a car dealership and learn all about the car — you do your research first. That consumer power is trickling down in the advisory marketplace as well.”
Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the Nicsa panel, they do not necessarily reflect the views of Nicsa or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.
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