The Future of Financial Advice: Digital Trends and Human Touch
Finfluencers? Never forget meme stocks and "stonks."
Financial advice is going digital and, at the same time, shifting to meet changing demographics and different ideas of what investment goals are and what constitutes advice.
Financial advice is no longer about your broker taking you to lunch! In fact, between robo-advising, hyper-personalized digital offerings, and social media “influencers,” that model is as dead as can be.
But here’s the irony for all of the GenAI and social media (remember meme stocks stonks?) people still want humans in the loop. More about that below
👉TAKEAWAYS: The six trends shaping financial advice
Changing demographics, including significant wealth transfers and growing diversity, is driving the need for innovation in financial advice.
Holistic financial well-being advice is broader and incorporates many individual needs, necessitating a fundamental shift in how advisory services are delivered.
Digitally accessible and hyper-personalized experiences are now expected from financial institutions.
Fair and transparent pricing models come with the opportunity to improve trust and affordability for individuals.
Social media is increasingly used as a resource for financial information, but this poses potential risks.
Technology innovation, such as genAI, machine learning, and blockchain, can bring forward great efficiency gains if deployed responsibly.
👊STRAIGHT TALK👊
This was a great read, but despite the talk of GenAI, hyper-personalization, and the expectations of digital access, humans still have a role to play and one chart proved this.
A CFP Consumer sentiment survey in 2023 revealed that only 11% thought that AI and social media could replace a financial advisor, and 77% said that technology could supplement them, or not replace them.
At least for now, human financial advisors have received a stay of execution. For how long, no one knows, but there are clearly three trends moving against humans.
First, GenAI and technology are allowing digital platforms to better educate clients and answer financial questions at a level that was unthinkable just a few years ago.
Second, note that this survey was from the US. In Asia, the sentiment was different, with 78% saying that a one-stop digital platform would improve efficiency, meaning that they are far more open to digital-only advice.
The final issue is demographics. As baby boomers, like myself, age out of the survey, a newer digitally native group will likely trend toward Asia’s desire for digital platforms.
Yes, digital is changing everything, but humans aren’t going anywhere for a while.
What do you think?
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