As is the case in the rapidly-evolving industry of financial services, 2015 was a year of exciting changes in terms of the products and services that are available to the financial consumer. As we reflect back on the year, let’s take a look at some of the most meaningful industry trends from 2015.
The Creation (and Acceptance) of the Robo-Advisor
The concept of robo-advisors started out with Betterment, Future Advisor, Wealthfront and other direct-to-consumer web-based offerings, but the model has now spread to hybrid firms like Schwab and Fidelity. With the ability to create a target asset allocation with auto-rebalancing and tax harvesting, what’s not to like?
Who Actually Buys Stocks Anymore?
ETFs and other types of index funds have come crashing into everyone’s portfolios. ETFs now come in many flavors including geography-specific ETFs, industry-specific ETFs, asset class-specific ETFs, ETFs to short the indexes and many more. Many individual investors have found these products to be highly beneficial, in terms of low cost structure, less tax implications and intra-day pricing. Many automated portfolios are exclusively or primarily made up of ETFs, continuing the proliferation of these products.
Immediate Gratification and High Expectations
Consumers are used to next-day delivery for every possible item in the world, and expect to be able to search, order and purchase any product in the world from their phone (or watch). Gone are the days of traditional, old school distribution mechanisms for everything from retail products, taxis, music, movies and monetary transfers. The expectations for immediate gratification have entered into the financial services industry, and the next generation of investors will demand the ability to make changes to their accounts and perform transactions in real-time, on any device and with no delays.
What Should You Be Doing in 2016?
In an environment where consumers have real-time, online demands, financial services firms (and organizations in other industries), must provide immediate, client-facing services that augment and leverage their existing delivery channels. Just like robo-advisors have automated portfolio rebalancing and tax harvesting, financial services firms must find ways to automate business processes, especially ones that touch the customer.
One such example is the onboarding process. Opening an account has to be quick, easy, online and paperless. At the same time, it has to fulfill the regulatory and legal requirements for disclosure and suitability—and have processes built into the automated process to perform real time anti-money laundering, fraud screening and OFAC and identify verification. And, if the current DOL legislation is passed, it will only be compounded.
As 2015 has reaffirmed, the demands of the financial consumer are constantly and rapidly evolving. In order to keep up, firms must find better, faster and more economical means to support and adapt to rapid change. Use of a modern, flexible and fully integrated automation platform can transform change into a competitive advantage.
We hope you have a wonderful remainder of 2015, and very happy, flexible and prosperous New Year!
In the meantime, if you’re interested in learning how IFS can help your firm adapt or automate your business processes, click here to get in touch with us.