Holistic financial well-being is prioritized, open and fair pricing reduces obstacles and technology innovation and AI are some of the top trends shaping financial advice in the fintech era.
FREMONT, CA: The financial advisory business was regarded as conservative, dominated by large, established institutions that mostly served the richer segment of the financial customers. Today, the landscape could not be more different. Rapid technological advancements, demographic transformations, and shifting consumer expectations have drastically altered the industry. The Future of Financial Advice, a new report from the World Economic Forum and Accenture, looks at how the face of financial advice is changing in an increasingly fragmented and complex industry.
It identifies some crucial trends that define the financial advice industry and discusses how lawmakers and regulators may ensure access to competent and trustworthy financial advice at a time when financial literacy is more crucial than ever are noted below:
Holistic financial well-being comes to the forefront: To accomplish what the report refers to as "holistic financial well-being," counsel and education are required in addition to point solutions such as vehicle insurance and pension plans. At this moment, a person is certain that they can satisfy their current and future financial obligations. This comprehensive method not only helps to develop greater savings and investments, but it also provides psychological benefits. According to a study conducted in the United States, it can make people feel less vulnerable and concerned about their finances, which substantially impacts general well-being and workplace productivity.
Banks must seize this opportunity by introducing technologies such as mobile apps and websites that provide more personalized guidance and education.
AI and technological innovation: As customer needs rise and new markets arise, deploying technology will be crucial for enhancing productivity, cutting costs, and allowing for wider market access. The interactive nature of digital and mobile platforms allows for greater personalization and can help to simplify financial planning. Generative AI will play an important role by automating many mundane operations and allowing advisers to devote more time to individualized guidance. At the same time, AI may make the advisor's job easier by delivering useful insights in real-time and automatically generating specialized guidance.
Increased digitalization and automation would help reduce the costs and barriers to young people and low-income households accessing financial advice. However, these expectations can only be met if financial institutions commit to updating their technology stacks.
The birth of the 'finfluencer economy': The influencer economy is currently worth $24 billion. While the world's top ten financial organizations have a combined 10 million followers, the top ten 'finfluencers' have 64 million, according to the Forum. Influencers are now playing an important role in financial education and guidance, filling gaps that the traditional financial industry has been unable to cover, particularly among Generation Z and Millennials. Influencers are viewed as more personable and inclusive than banks and are less'salesy'.
