Adam has been a financial advisor for the last 20 years, advising individuals and businesses on how to make better financial decisions. His prior background was in design and layering visual data as a result of studying land-use planning and architecture. When he got into finance, with his strong design background, he realized that the biggest challenge for consumers was they were missing the context under which they were being given advice and were often disengaged from the process and conclusions.
For that reason, 15 years ago he developed a process called Asset-Map for his own practice in Philadelphia. Since other advisors could use the platform, it went viral and the platform use skyrocketed. Now he is the full-time CEO of Asset-Map, with several thousand advisors using the platform globally across multiple currencies and languages.
Advisory interactions go remote
According to Adam, we are seeing a huge shift into digital presentation and remote meeting management. Notably, human advice will be facilitated by remote screen sharing, which will take over from face-to-face meetings and interactions. Interestingly enough, Asset-Map’s own evolution was influenced by a decade of doing digital presentation meetings for clients, rather than paper-based ones, and Adam claims that over the last 10 years approximately 70% of his firm’s meetings were held remotely. This gave them serious development feedback on how to streamline the Platform process for digital and remote only experiences.
“Most of our clients didn’t have time to meet with us [in person], so we went to remote meetings early on. Using the more modern tools—like remote presentations or digital screen presentations, without or with minimal paper—is really the way that the advice business is moving.”
Adam feels that companies have to imagine what clients would want if they knew how to ask for it. Also, he emphasizes the need to focus specifically on the most relevant topics while adding new functionality.
“Our current Platform experience actually comes from years and years of stripping away unnecessary elements to focus on a classic 80/20 approach. Keeping the focus of meetings to a high level is really imperative or else we’re going to get stuck in analysis paralysis.”
As an example, Adam shares that financial planning is a crucial part of credible financial decision making over the long term. However, one of the short-term check-ins that is included in the Asset-Map Platform is the ability to run quick Target-Maps; which can tell clients whether they are currently underfunded or overfunded for achieving certain financial priorities. While not necessarily a financial planning replacement, these quick calculations are an efficient communication tool that makes the conversation with the client more revealing.
Robo-advisors 2.0 lack support and guidance
Adam claims that companies are going to focus on engagement strategies between humans and consumers to help people focus on what matters. He does not believe that robo-advisors are going to eliminate the human advisor’s role. In his opinion, robo-advisors are going to accentuate the analytical model and the presentation layer of that feedback, like financial forecasting, trading and portfolio analytics.
“I think that we are in the robo-advisor 2.0 era, and that next generation robo-advisor 3.0 and 4.0, are going to be adopted by all human advisors. [Robo-advisors] will outsource the human component to living advisors and we’re [already] starting to see that they work efficiently together.”
According to Adam, advice will become commoditized while plugged in on top of the robo-solutions that are delivering scalable value at the lowest cost possible. He is sure that the robo element will dominate trading, processing, delivery, and all of those functions that can be effectively outsourced and scaled. However, there is a critical role for the human element:
“When financial decisions are rather complex, and there’s a high cost of being wrong, there’s no ‘reset button’. In such a situation, humans tend to want another human to help make that decision or provide guidance and feedback with confidence to move forward.”
We are in for massive wealth transfer
Adam states that there is a massive amount of wealth in the baby boomer population right now that will be distributed in the coming decades.
“If you’ve ever dealt with losing somebody in your family, you know what it takes to figure out where all of the assets, insurance, and financial instruments are located. It’s a very difficult and harrowing experience. I think [that] what we’re going to see is [that] baby boomers will finally recognize that they need to organize their financial life for the massive wealth distribution that is going to occur over the next 20 years.”
All these assets will have to be distributed in different forms: IRA distributions and RMDs, the succession of businesses and real estate, etc. In that process, there is going to be greater demand for advice, with a population that has an expectation of bedside manner in the form of a human; this is why Adam thinks that human advice will remain relevant, at least for the next 20 years. In addition, he thinks that there is going to be a spike in the need for fee-based financial planning, product-agnostic planning, and episodic planning roles. And companies that figure out how to actually get customers to organize their financial data are going to have a huge advantage for the delivery of financial services.
In spite of the plethora of tech solutions, today we all still require empathy, credibility, and guidance while making financial decisions. Tech tools can accelerate the decision-making process by visually aggregating financial information and presenting it in an easily understandable format. For this reason, anticipating the needs of clients and encouraging their financial wellness is a key priority for any enterprise that is aiming to grow in the financial services space in the long term.
Interviewed by Vasyl Soloshchuk, CEO and co-owner at INSART, FinTech & Java engineering company. Vasyl is also the author of WealthTech Club, which conducts research into Fortune and Startup Robo-advisor and Wealth Management companies in terms of the technology ecosystem.