The Future of Financial Planning is Digital

When was the last time you actually walked into a bank to deposit a check? We can’t remember either.

Digital transformation has changed the face of financial services, from banking and payments to lending and crowdfunding to blockchain and crypto. In countless ways it’s made our lives so much easier. Financial planning is another story.

Across the industry, too many advisors still rely on face-to-face interactions and paper printouts to maintain relationships with clients. But the clients have changed and the industry needs to change with them—or it will risk becoming obsolete.

As EY says, it’s a battle for trust. “The consumer is king in the digital world; experiences are the new product….”To keep pace, FIs will need to fundamentally reframe their strategies and business models to meet evolving customer needs and create the lifestyle-enabled, ecosystem-based experiences those customers now expect.”

And they’re not just talking about wealthy or high-net-worth individuals. Digital tools have democratized access to financial data and information (remember the GameStop stock frenzy of 2021?), expanding consumers’ interest in, engagement with and appetite for all things financial—and financial planning. There are even investing guides for teens.

According to McKinsey, in 2021, one-third of affluent households—those with between $250,000 and $2 million in investable assets—took a hybrid investing approach, working with both traditional financial advisors and self-directed accounts. That’s an increase of 9 percentage points in three years, “due to a combination of a desire for human advice and the affordability and ease of direct investing.”

If those figures don’t make you sit up and take notice, what will?

Today’s tech-savvy customers want curated experiences tailored to their personal preferences; self-service tools that provide anywhere, anytime access to their data; and holistic insights that anticipate and adapt to their shifting goals and needs.

And the benefits cut both ways. These same things can help advisors increase client interaction and connection; enhance trust and deepen client relationships; and capture new growth opportunities and future proof their business.

Sounds great, right? So what’s the problem?

The problem is, the industry is still trying to cram a square peg into a round hole, and force-fit tools that were never meant to work this way… to work this way. These legacy tools aren’t dynamic, they aren’t collaborative and they aren’t customizable. They are based on old technology and business models designed around what a financial institution has to sell—instead of what a client might need or want to achieve.

Helping clients identify and answer that “what-if” question is the secret to success in financial wellness planning. It requires financial planning software that can illustrate scenarios and model outcomes in real time and real terms without lots of heavy lifting or cumbersome hand-holding.

Planning to have a baby? Congratulations! But how does that impact what you can save for college if you do so now? What if you wait and save for five more years, when you’re also earning a lot more? Oh and keep in mind—if it’s a boy, you better build in that extra surcharge for the cost of teenage car insurance. 

These questions sound simple, but considered holistically, they can have a complicated ripple effect.

Tools designed with the end-user in mind help advisors bring clients into the process, giving them more visibility and control over the variables that impact their financial future. They also increase the opportunities for advisors to bring value to the table—whether the goal is to pay down debt, buy that dream house or boat, travel the world, or give gifts and leave a legacy. It’s the difference between tracking the performance of a single account balance and how that performance contributes (or doesn’t) to the larger scheme of things.

As we’ve all seen, the demand for on-demand concierge-driven products has only increased with the pandemic. Not only do we want dinner delivered by DoorDash, we want to see when the food is picked up, know when it gets stuck in traffic, and be able to contact the driver in real time to re-route the delivery.

Financial planning should be no different. It’s time to meet consumers where they work, live, play, and it’s all too clear that “static” products and services won’t get you there. Instead, it’s going to take a new generation of interactive, collaborative planning tools that are built from the ground-up for financial wellness—and all the different ways clients may define and achieve it.

As EY says, “the end game is to create segments of one—microsegments where each customer is treated uniquely.”