By Dan Sachar/ Ladenburg Thalmann
As technology-enabled service rises in importance, independent financial advisors will need to work with firms that can successfully anticipate where the industry is going in the future, and position them for success ahead of the pack.
For independent advisory and brokerage firms, there’s no better way to develop this perspective than by partnering with early-stage tech startups. Of course, this is easier said than done.
Identifying and acting on the right opportunities begins with the crucial first step of building extensive networks and connections with people on the frontlines of the startup community. From there, identifying the right trends and criteria becomes essential.
EMPHASIZE THE MACRO TRENDS
The most compelling opportunities for independent firms supporting financial advisors are with tech startups that tap into a macro socioeconomic trend, and solve financially-related pain points in a growing, addressable market.
A prime example of a macro trend is the rapid growth of freelancing – either as an individual’s primary or supplemental income – as part of the rise of the “gig economy” and “shared economy” models. In this changing environment, there is an urgent need for nimble and efficient digital tax solutions to help manage the complexities of independent income for this swelling segment of the American worker population.
This includes administrative time loss, budgeting and planning challenges posed by calculating and submitting the right amount of taxes regularly. Independent firms that collaborate closely with tech startups to address these needs, and do so in a way that seamlessly plugs into broader financial advice offerings, will deliver an undeniable advantage to their financial advisors.
On the younger end of the age spectrum, solutions for handling student debt may rise in importance as more Millennial advisors enter the field and serve Millennial clients. Meanwhile, for advisors working with employers, new talent and benefits solutions that extend beyond overseeing 401(k) assets represent another growth opportunity for the financial advice industry.
ADVISOR SERVICE DIVERSIFICATION
Next, it’s crucial to prioritize strategic alliances with startups that can significantly diversify the existing services that firms enable advisors to offer for their clients. While human-powered advice will remain essential to the profession, the services that end-clients receive will continue to evolve.
For instance, at one time financial advice was mainly all about investment management. Later on, advisors started more robustly incorporating planning, insurance, and trust services.
Similarly, the promise of fintech today is its potential to empower advisors to meet the growing challenges and complexity of their clients’ financial lives with scale and efficiency, across a much broader sweep of services than ever before.