A financial services firm’s ability to attract new clients and a younger workforce will require a willingness to adopt new technologies and integrate them into the firms’ traditional business model, according to a panel discussion at the Portfolio Management Association of Canada’s national conference in Toronto on Tuesday.
The panel tackled the topic of financial technology (fintech) and stressed that discussion on the topic can no longer revolve around making a choice between digital tools for financial services and the relationships that firms and advisors have with clients.
“It’s an ‘and,’ not an ‘or’ [regarding the use of fintech],” said Kendra Thompson, a panellist and managing director of wealth management with Accenture PLC in Toronto. “You must understand how to enable a depth of relationship using technology.”
The need to adopt those technologies to serve clients is likely to come sooner rather than later as those who choose to use digital tools cannot be confined to a single demographic, the panel suggested.
“There are people in their 40s and 50s who are as digitally savvy as people in their 20s,” said Preet Banerjee, a management consultant for the financial services industry in Toronto who also spoke on the panel.
Toronto-based Wealthsimple Financial Inc. is an example of how individuals who are approaching middle age or are already middle-aged are turning to technology for their investments. The robo-advisor, whose core client base consists of millennials, has found its business is growing in part because those millennials’ parents are opening accounts, said David Nugent, another panellist who is portfolio manager and chief investment officer at Wealthsimple.
Young adults used to go to their parents’ advisor by default and now millennials are telling their parents to try digital tools because those parents are comfortable using online services, said Nugent.
The widespread use of technology by various groups is why the debate of “either/or” must end if advisors are going to appeal to investors, said Thompson: “Those who are in the business of maintaining advisory sales forces need to be equipping their advisors to be competitive in that environment. The longer we debate whether or not there is a role for digital in fully advised relationships and in the traditional high net-worth market, the longer we disserve advisors.”
A move among financial services firms to ensure they are equipped with tech tools will also prove appealing to future financial services professionals, added Banerjee: “If you want to bring in that next generation of portfolio managers and advisors, you have to make sure that their technology interface is also current and relevant.”
Advisors’ skills and talents will still be required in the future, suggested Banerjee, who said that the value in providing advice and managing a portfolio will remain, but the tasks that lead up to that, such as opening an account, is where the efficiencies will be found.
Custodian services is an area in financial services that will likely be disrupted in the future, suggested Nugent and Thompson.
“There are a lot of repeatable processes in the custodian model that can be automated and if you automate all of those jobs away, you have a cheaper delivery,” said Nugent.
Although that will lead to an elimination of more traditional roles in that department, it also opens up an opportunity to attract younger employees with digital skills, such as managing “bots,” or applications that run automated tasks, according to Thompson.
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