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Financial Advice Technology Coming Your Way

Financial Advice Technology

Financial Advice Technology Coming Your Way

Financial advice technology is rapidly gaining ground throughout the financial services industry. And more frequently, financial advice technology is being offered in workplace retirement plans.  An example would be in the form of professionally managed accounts, which provide participants an investment portfolio that’s handled by a professional money manager. Digital tools are being offered in addition to financial advice technology, too, as more employers and retirement plan service providers embrace smartphone apps and online interfaces to help engage more workers in retirement planning.

A logical question for plan sponsors to ask of their advisor is ”how are you and your firm responding to financial advice technology?“  Or, “how is your retirement plan advisor making a difference for plan participants using financial advice technology? Is your retirement plan advisor embracing financial advice technology? If you aren’t already talking to your retirement plan advisor about financial advice technology, you should be.

According to a recent interview in FinancialPlanning with Lule Demmissie, president of digital financial services solutions provider Ally Invest, financial advisors are missing out on important opportunities when it comes to financial advice technology. The biggest of these is the chance to improve their interactions with clients — or in the case of workplace retirement plans, the plan participants. The idea for advisors, according to Ms. Demmissie, is not to just sell products and financial advice technology solutions, but to craft a story about the financial future that resonates with participants so they can see how that vision would unfold for them, both today and tomorrow.

When it comes to financial advice technology as delivered via robo advisors, for example, Ms. Demmissie said that robo advisors will change the nature of what financial advisors do and how they deliver advice. However, she does believe financial advisors will transform the financial industry by going above and beyond their current focus on financial products and services. Financial advice technology will help augment advisors’ orientation toward, in Demmissie’s words, “the nuances of human psychology, what motivates their client, what really keeps them up at night, etc.” Demmissie also believes that financial advisors should move toward more of an inclusive strategy, i.e., engaging several members of their clients’ families, such as spouses and children.

In addition, Demmissie noted that while many independent registered investment advisors (RIAs) are embracing technology and doing it well, she said she thinks that advisors are using financial advice technology more as a means to increase their efficiency than to enrich the client experience. She noted that financial advisors must become “digitally native” to bring to life storytelling tactics and to shape the client experience in a way that’s dominated by the new digital landscape.

There is bound to be an increasing number of financial technology solutions in the immediate future.  And many more in the long-term.  (Many of these technology breakthroughs and solutions will be showcased at the upcoming DC GENIE Awards in New York on August 22nd at the Park Lane Hotel.  Click here to learn more of the DC GENIE Awards)  It is not sufficient to have access to the technology solutions today, but plan sponsors and plan fiduciaries need to be working with a strong retirement plan advisor.  Today’s plan sponsor and plan fiduciaries should be working with a retirement plan specialist who is schooled in plan participant behavior, investing emotions, decision-making theory, and plan design parameters.  A retirement plan professional who holds the C(k)P Designation – conferred by The Retirement Advisor University in collaboration with UCLA Anderson School of Management Executive Education – would be an excellent starting point for retirement plan fiduciaries.

It is important for plan sponsors to know how retirement plan advisors are utilizing financial advice technology in their practices and with their clients – if they are using it at all. Financial advice technology is taking the industry by storm, and advisors — and employers and their retirement plan participants — must be ready. To be sure, financial advice technology is only going to become more pervasive in all aspects of financial services and financial planning. The time to begin embracing it is now, if not yesterday. 


Steff Chalk

Steff Chalk

Managing Editor at 401kTV
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.
Steff Chalk

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