The impact of the COVID-19 pandemic has been so swift and broad across the global economy that it’s hard to determine what lasting changes will come to planning and financial services overall. At the same time, there are some early trends that advisors and wealth management firms should pay attention to:
- No more digital advice debates – the pandemic has forced everyone online, and the realization for many that much of business can be done remotely also applies to the practice of wealth management. The idea that independent robo advisors will falter in a crisis has found little traction too, as Wealthfront and Betterment, the leading digital advice firms, reported double-digit percent increases in account sign-ups despite stock market turmoil. Any firm without a digital advice offering is missing out.
- Little tolerance for surprises – the emerging investor generation has now lived through three market upheavals: 9/11, the 2008 economic crisis and the current pandemic. It’s safe to say that this investor generation will have little tolerance for surprises like hidden fees and even less tolerance for unnecessary expenses. Successful advisory firms will heed the psychic toll the crisis has wrought on clients and truly embrace the call for transparency in fees and investments that has swelled over the past few years.
- A new investment risk? – the sudden and unexpected rise in digital advisory services was not anticipated by advisory firms, leading to service blockages across virtually every hybrid digital advice platform. Moreover, there’s a real likelihood that system glitches can take down a digital platform at the worst time possible. Advisors with clients who have digital investments may soon begin to apprise them that these technical and capacity issues are in fact modern investment risks, and regulators may also be moved to examine the issues surrounding these factors as well.
Cold water on a hot investment scene – the pandemic has thrown cold water on what was a hot FinTech investment scene. In fact, global FinTech funding has dropped from USD 11 billion in the fourth quarter of 2019 to USD 6 billion in the first quarter of 2020. This could potentially result in a new path forward, one which sees joint innovation efforts to sustain and protect the flow of the best ideas and new technologies.