Next Generation Planner: March 2021
Ana Trujillo Limón
Editor-in-Chief, Financial Planning Association
www.linkedin.com/in/anatlimon/
There is one positive impact of the pandemic: it forced us all to adopt digital technology and it forced planners who had long resisted adopting technology to finally do so.
Dani Fava, head of strategic innovation for Envestnet, calls this silver lining the “involuntary tech revolution.”
As Fava told the Journal of Financial Planning in the Q&A in the February issue, there are four “social mega trends” influencing the fintech landscape.1 These trends were already in motion prior to the COVID-19 pandemic, but the past year has accelerated them.
According to the report, “Social Mega Trends Are Influencing FinTech. Are You Paying Attention?” from Envestnet, “social mega trends are changes in everyday behavior that occur at scale and have profound impact on our society.”2
Fava told the Journal in February that the four social megatrends are decentralization, measuring wellness, the age of the creator and the involuntary tech revolution.
Decentralization. Envestnet describes this as the “move away from the middle,” which has been in motion for about 20 years.
“It started small, with music, and has grown to affect major institutions (and governments),” the Envestnet report noted. One example of decentralization is music, which moved from consumers purchasing albums to utilizing technology (like Spotify or Apple Music) for on-demand music.
Envestnet recommends implementing a subscription or other hybrid payment model for some clients or expanding services that your clients would rather work with you for, like banking or insurance.
Measuring wellness. Chances are that as you read this article, you’re wearing a smart watch. That smart watch tracks your sleep, resting heart rate, exercise and calories burned. Maybe you recommend Mint to your clients to track their budgeting. Perhaps you use the Calm app to help you meditate. Maybe you signed up for Noom to lose the quarantine 15. All those are part of the mega trend of measuring wellness.
Envestnet recommends incorporating topics like insurance, long-term care plans and multigenerational planning into conversations with your clients. Also, incorporate regularly talking about health and wellness and how it could impact your clients’ finances.
Age of the creator. Most days of the week, I wear long, beaded earrings handmade by a company called Roadside Remedies. It’s a one-woman shop that has produced all my favorite pieces. This is an example of the idea that we value the creations of our peers and want more of them. Plus, we want to create something of value for them, too.
Envestnet recommends that in order to keep up with this trend, you can share your voice as a thought leader in the space. Also, create your own content, like podcasts, videos or blog posts, to showcase your expertise.
Involuntary tech revolution. This is that “silver lining” Fava talked about with the Journal—the pandemic forced us all to adopt digital technologies and we likely aren’t going back.
“The involuntary tech revolution during the pandemic has pushed both advisers and their clients to really adopt technology and do everything online,” Fava told the Journal.
Envestnet recommends prioritizing client technology, especially the client portal, and giving them access to the information they need and want at any time. Also, utilize digital communication and e-signatures when you can.
“Now, clients are not only willing and able to, but their expectation is that [business] should be able to be done online,” Fava told the Journal. “These changing expectations and increased levels of trust have advisers looking at their practices in a different way.”
More FinTech Trends in 2021
Industry publications are reporting general trends in fintech in 2021, including increasing spending on technology for firms to keep up with their competition and focusing on clients’ digital experiences, according to Wealth Management.3 Also, the cryptocurrency debate and acceptance will continue, and AI use will continue to expand.
Increasing spending on technology to keep up. Wealth Management, citing research from F2 Strategy Research, noted that firms plan to increase their spending this year in order to keep up with their competition.
Focusing on the digital experience. Wealth Management noted that in the coming year, firms will increasingly offer digital experiences for clients—and those clients will be more diverse and be from all over the world.
Will Bailey, chief strategy officer of InvestCloud, writes in Financial Planning that among his clients, existing digital client engagement rose more than 30 percent in 2020.4
“Digital transformation starts with the user and must be geared around what the user can see and do—the client experience,” Bailey wrote.
Digital currency taking center stage again. In 2017, we all saw the rise of cryptocurrency, with Bitcoin taking a majority of the headlines, and now in 2021, it’s rising again. If in the last four years you haven’t read up on cryptocurrency, you might want to start as clients are seeing it in the news and might start asking questions.
“Educating yourself, educating your clients [on cryptocurrency] is paramount,” said Tyrone V. Ross, Jr., in an episode of the podcast On Purpose, with Tyrone Ross.5
Investopedia recently reported that Facebook is gearing up to potentially launch cryptocurrencies—including Diem and Novi—as the buzz around digital currency continues into 2021.6 CNBC reported in a recent article that cryptocurrency will begin to gain more mainstream acceptance as companies like PayPal increasingly allow users to buy and sell Bitcoin on its platform.7
AI use expanding. In line with enhancing digital experiences, the use of AI will continue to expand into 2021, allowing firms to offer more personalized services to their clients. It will also enable firms to offer more personalized marketing to help clients find what they need more efficiently.
Endnotes
- See the Journal of Financial Planning Q&A with Dani Fava at www.financialplanningassociation.org/article/FEB21-Q-A-dani-fava-involuntary-tech-revolution-artificial-intelligence-and-asking-questions.
- Download the full report at www.envestnet.com/files/pdfs/Social-Mega-Trends.pdf.
- See www.wealthmanagement.com/technology/future-planning-5-trends-planning-fintech-s-next-5-years.
- See www.financial-planning.com/opinion/coronavirus-fueled-digital-breakthroughs-for-2021.
- See www.coindesk.com/podcasts/on-purpose-with-tyrone-ross.
- See www.investopedia.com/facebook-fb-hopes-to-launch-digital-currency-in-2021-5090528.
- See www.cnbc.com/2020/10/21/paypal-gets-into-crypto-with-new-features-for-trading-and-shopping.html.