Market Overview

How Technology Can Improve A $30 Trillion Market


“The times they are a changin’” sang Bob Dylan in 1964. A year later, Intel’s Gordon E. Moore documented that computing power grows exponentially, doubling every two years in what is now known as Moore’s Law. Nearly 50 years later, the financial services sector is illustrating both points and Americans are benefiting.

What has been the denominator for this tectonic shift?

Physical to virtual distribution.

The financial services sector resembles the media sector in that the product or service can be delivered and consumed completely electronically. The media business has already seen the near-complete metamorphosis of the industry. Barnes and Noble fell away to Amazon; Cinemax fell away to Netflix.

While there has been sweeping change in financial services, there’s one last fixed bastion of brick and mortar: financial advice. But now that’s changing – and quickly.

This summer, online advisory services grew 36.5 percent in a mere three months.

With over $30 trillion in investable assets in American households, the future of financial advisory is expansive. Yet, it’s characterized by conflicts of interest, lack of access to unbiased advice, distrust and inertia. What’s worse, the shift from pensions to 401ks – with no increase in financial education – has left Americans facing a whopping $14 trillion retirement shortfall.

How Technology Can Deliver Better Advice

So, how can the industry be improved? It’s all about enhancing the value proposition through:

  1. Deep data. For example, apps that allow users to link any electronic financial account to get one-click analytics and insights into their portfolio.
  2. Automation. Automated processes can also be used to enhance the efficiency of the business. Examples include re-balancing and tax-loss harvesting, which can lead to a significant boost in after-tax returns.
  3. Scalable systems. Lastly, clean IT infrastructure can enable advisors to build an efficient and scalable business.

You can dip your toes in the sea of this change by trying Personal Capital’s free software. By linking your accounts, you can get a free check-up on your investment portfolio.

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Posted-In: BZ SponsoredPersonal Finance


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