They surveyed a wide range of providers from fintechs, to get a deeper look into the financial industry in Australia, and how fintechs can play a part. In Australia, there are approximately 18,000 advisers, 2.4 million people being advised and just 50 percent actually satisfied with the service they are receiving. Just one in five Australians are engaged in the financial planning process. They tend to not understand what robo-advice is, and yet simultaneously they desire digital engagement with their financial adviser.
To delve deeper into how fintechs can play a part in the financial planning process, the FPA’s report looked at the six steps to financial planning.
What are they?
Step 1: Establish the scope of engagement
Step 2: Identify the client’s goals and financial issues
Step 3: Assess the client’s financial situation
Step 4: Prepare a financial plan – i.e. identify saving and investment strategies to attain retirement goals
Step 5: Implement recommendations
Step 6: Review and revise
But how can fintechs become involved and improve upon these financial planning processes?
The fintech landscape
Comparing the six financial planning steps with the capabilities of fintech companies in Australia, the FPA’s report looked into where in the six steps, fintechs can integrate and make improvements. They found that over 100 of the 400 fintechs surveyed deliver solutions which align closely with one or more of the six steps.
The report asks if these 100 fintechs complement or complicate the financial planning process. Do they enhance engagement, save time and costs, and do they seamlessly integrate with other planning processes?
Benefits of fintech solutions
The FPA found that fintech solutions provide all of these things. They can be highly beneficial because they are cost effective, save time and many of them can easily connect and interact with any system, making your job easier. Of the 100+ fintechs which align with the six steps, a large majority can easily integrate with any system.
With the use of fintechs, a financial planner can spend more time with existing clients, see more new clients, and build communication processes which are valuable in reaching a more engaged financial planning relationship with the client. Financial planners can advise based on more specific life events of their client, moving beyond purely portfolio construction.
Why fintech is not a threat
The report claims that fintech is not a threat to financial planning because technologies, when used fully and properly, can improve processes already being used, making it more efficient, timely and cost-effective. They can deliver compliance and provide better engagement with clients, overall providing highly effective solutions.
They aren’t meaning to replace financial planning, but to enhance it for both the business, the financial planner and the client.
To read the full report, go to FPA Fintech Report.