In the next five to ten years, the role of the financial advisor—the human advisor—is going to be more and more technology augmented. This is the central idea emphasized by Joe Elsasser, CFP, president and founder of Covisum. In the past, we told software what to do and then software did it for us. As time moves forward, however, software tells us what to do and we interpret, explain, and hold clients’ hands to show them why they should do it. In this article, we will discuss if advisors need such a shift and how WealthTech solutions can make such a future become reality.

Transition To Prescriptive Software

We hear from many experts that the role of financial advisor is shifting from merely investment advisor or wealth manager to financial planner. Elsasser says that it’s going to be an advisor's job to quantify or demonstrate why software-provided answers are better for clients. He supposes that this transition will happen in the next couple of years.

“Advisors should recognize that, frankly, software is able to consider more variables than a human can and it’s probably able to deliver better solutions than a human can,” he said.

According to Elsasser, the Social Security Timing software that he launched almost 10 years ago is a great example of this shift. He was looking for a Social Security optimizer to empower his own financial planning practice, but he couldn’t find any adequate solutions on the market. To rectify this, Elsasser joined forces with a college friend to build Social Security Timing, which later grew to become Covisum’s first product. Similarly, tools should empower advisors—advisors should not empower software.

The importance Of Being Focused

Building a system able to provide enhanced insights requires significant effort and time, so it’s incredibly important for both financial advisors and fintech firms to have a niche; however, Elsasser says that most advisors and financial planning software firms don’t have one.

“Over the next decade the shift to niching fintech software companies will become more and more pronounced to deliver better answers when you’re talking to a single or a cohesive audience.”

Elsasser is sure that success doesn’t depend on what niche one chooses. At Covisum, for example, he chose to focus on the niche of customers close to retirement; Covisum intentionally left millennials out of its focus because millennials have a whole different set of questions. Of course, if another company that served millennials became successful, this would not contradict the point.

“I think there’s a huge value in fintech companies that decide to niche their business in that direction. I don’t see a lot of great options out there today in any of those niches for advisors,” he said.

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