Three Trends Driving FinTech in 2022 and Beyond: Part 3: Demand for financial wellness by investors

by | Nov 4, 2021

By Sarah Rasmuss, Chief Product Officer for CircleBlack

Financial technology product roadmaps are changing to keep up with the demand for advancing technologies. Throughout this three-part series, we’ve examined two of the trends driving FinTech in 2022 and beyond. Now, in part three, we’ll explain how financial wellness is causing changes in the FinTech landscape.

Investment performance is a commodity, and investors can find it anywhere and from anyone. It is not what differentiates advisors from their competition. Advisors know they can no longer compete on investment performance alone. Investors expect platforms to offer seamless service and multi-channel communication. And they expect advisors to manage their full-cycle of “financial wellness and provide financial therapy.” Investors want you to know them, understand their objectives, and bring those results to life.

Financial Technology must continue to advance, bringing financial wellness engines along to drive outcomes for investors’ further validating advisors’ desires to bring financial wellness to the relationship:

  • Driving financial outcomes 
  • Combining behavioral finance with data-driven next best steps for advisors and investors 
  • Enabling advisors to define Investor objectives, track, and deliver 
  • Planning for AI-augmented insights to drive more meaningful engagements

Reaching financial wellness requires the individual attention of each investor. For a three-dimensional understanding of each client, advisors need to enable technology to explore behavioral finance aspects, including the psychology behind investing. Technology also helps them to understand the relationship between beliefs and the choices investors make. However, many do not realize the extensive role a tech stack can play in achieving this goal.

Financial wellness studies over the past few years indicate that investors have a desire for financial wellness programs. However, they also expect financial wellness from the first in line to deliver it—their financial advisor. Studies conclude that many factors are influencing financial wellness:

  • Personal characteristics: includes both personality factors and societal status; for example, age or marital status. 
  • Financial literacy: working knowledge of financial concepts and tools to make the most advantageous financial decisions.  
  • Financial behavior: refers to financial actions, for example, financial planning, saving, and investing. 
  • Financial situation: refers to objective wealth, such as homeownership, salary, benefits, and accumulated wealth. 
  • Financial stressors: financial events such as losing a home, personal bankruptcy, or job loss. 

Source- MetLife Study of Financial Wellness Across the Globe

These factors signal a need for advisors to include technologies to account for life events that impact financial wellness in their tech stacks, aside from only portfolio management applications. 

Sarah Rasmuss is Chief Product Officer for CircleBlack, a unified best-of-breed wealth management platform that consolidates data from multiple custodians and allows advisors to choose the best solutions to fit their tech stack.