The Future of Financial Planning


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We are living in a strange time when it comes to financial planning. People have less disposable income than ever and are more focused on living month to month rather than putting money away for the future.

However, this makes the need for people to get financial advice even more important. Many people who don't think they have the budget to save just haven't received the right guidance and may have more opportunities available to them than they initially believe. The public is gradually becoming aware of this too as, according to the latest industry research, the global adoption of budgeting and financial planning started from 8% in 2015, then slowly grew to 10% in 2017, before hitting a massive 29% in 2019.

This makes financial planning a growing sector, and brands would do well to market themselves to take advantage. With that in mind, let's look at what we can expect from the future of financial planning.

Generational Wealth

While it's true that Millennials are often thought of as having very little spare money and are struggling to achieve life goals which would have once been considered baseline — such as purchasing property — that may be all about to change.

The parents of Millennials — i.e. Baby Boomers — are now reaching the twilight years of their lives. Bear in mind that this generation controls around 70% of all discretionary spending. We can expect to see some, if not all, of that wealth pass to their children. In fact, it's thought that approximately $18 trillion is going to pass from Baby Boomers to their descendants over the next few years.

This means that Millennials will soon become a lucrative market for financial planners, and they should start marketing to them now to stand the best chance of retaining the family business once their elder relatives have passed on. This will likely mean shifting focus away from things such as risk, growth, and retirement income, instead focusing on stability, conservation, and portfolio assets.

Digital Technology

Fifty-eight percent of independent advisory firms have stated that they are planning to invest in new technology over the coming year. They are hoping that digital technology will help them better serve and engage with more customers than ever before.

The main thrust of digital technology as applied to the financial advice and planning industry is dedicated to automating some of the less client-focused elements of the business. Processes such as portfolio rebalancing and data aggregation can be carried out by artificial intelligence-powered software which frees up advisors to spend more time with clients. Not only this, but automation makes the business side of things run more smoothly — positively impacting the bottom line and client experience.

"There's more time to discuss work-life balance, health, kids, starting a side business, home-improvement projects, et cetera," said Financial Advisor and Owner of MNM Vested, LaKhaun McKinley. "This helps clients understand that financial planning goes beyond their retirement accounts and that I can be a helpful partner and resource for more than just investment advice."

Big Tech

The next few years are likely to see the world's big tech firms, such as Amazon, Apple, and Facebook, become ever more immersed in the world of finance. Amazon and Apple are launching their own credit cards. Meanwhile, Facebook is dabbling in its own currency and money payment and transfer service, Libra, and we can expect to see this pattern continue.

These firms have an enormous and dedicated audience they can market to, and their products are likely to come complete with certain advantages when used on their proprietary platforms. This means financial advisors are going to have to take these expanded services into account when helping their clients make fiscal decisions. However, more than this, we may see these companies expand into financial advice themselves, which would set them up as significant competition for your brand.

"There are some nice but generally niche things that consumers can look forward to," said Managing Director of Behavioral Finance & Investing at Betterment, Dan Egan. "Among these are services that allow consumers to create virtual credit cards for online accounts, thereby reducing the risk of cyberattacks. But while these services may increase consumer safety, they're not fundamentally changing the way people engage with financial services, or even with their finances."

Final Thoughts

From automated software to big tech firms entering the business, the third decade of the 21st century is set to be incredibly transformative for the financial planning business. Combine the onslaught of technology with shifting client demographics and the coming years are set to offer big challenges and opportunities.

The future of financial planning is set to be a hot topic at Digital Wealth 2020, taking place in May at The Ritz-Carlton Fort Lauderdale, FL.

Download the agenda today for more information and insights.

WBR Insights is the custom research division of Worldwide Business Research (WBR). Our mission is to help inform and educate key stakeholders with research-based whitepapers, webinars, digital summits, and other thought-leadership assets while achieving our clients' strategic goals.

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