It used to be that simply providing asset management services was enough for your clients to come to you. As a financial advisor with expert knowledge, you had a better chance of outperforming the stock market than the average investor.

But if those were the good ol’ days, then great days are ahead, thanks to fintech.

Today, the industry is crowded with advisors offering traditional asset management solutions where advisors ultimately wear the dual hat of investment researcher and portfolio manager.  This creates a situation where advisors have a limited number of clients they can service exceptionally, along with reduced time available for personal client interaction. And that’s good news for advisors like you who are actively looking for ways to not only differentiate your firm but also fulfill your fiduciary responsibility to the best of your ability.

Let’s dive into the causes of this changing of the guard and explore how you can make sure you’re ready to leverage this industry shift by harnessing fintech.

How the Industry Changed

Schwab made big waves last year in October when it announced the elimination of commissions. But the biggest industry disruptors to the traditional asset management model of services have been Vanguard and robo-advisors. 

The Vanguard Effect

Vanguard’s focus on providing low-cost investing has driven down prices across the industry. The impact and influence is so profound that Morningstar gave it a name: The Vanguard Effect.

Along with the lowering cost of management fees, Vanguard also has provided access to cheaper, if not free, funds for advisors to offer to clients. And the firm isn’t done disrupting yet. Although known more for its index funds, Vanguard is also one of the largest active asset managers with $1 trillion active funds among its $5 trillion in assets.   

The response to Vanguard across the industry cannot be overstated. One particularly noteworthy example took place in 2018 when Fidelity, traditionally more known for actively managed mutual funds, unveiled four index mutual funds with no annual fees. 

As advisors, you have protected your fees for years, but now face stiff competition from asset managers like Vanguard, which have launched advisory services. Vanguard’s scale will likely result in tremendous change within the advisory services space in the coming years, making it more important than ever for advisors to differentiate themselves.  

The Rise of Robo-Advisors

Like Vanguard, robo-advisors have also changed asset management when it comes to low-cost investing.

In addition to very low fees, robo-advisors have made the process of starting to invest easier for everyday investors who aren’t well-versed in wealth management jargon, don’t want to use an advisor or go through the process of vetting an advisor. As U.S. News & World Report put it in 2016: “Just hand over your money, tell the robots a little about your risk tolerance and goals, and leave the rest to the algorithm.”

Robo-investing has also almost completely eliminated the barrier to investing with low minimum balances and automatic adjustments without ever having to make the time to meet in person with an advisor. Now more people than ever can start growing their assets and even take advantage of tax-loss harvesting.

More Access to Strategies

Beyond Vanguard and robo-advisors, there has been a big impact on the accessibility of strategies. 

Due to wide distribution, strategies have become available at little or no cost.  The more a strategy is distributed, the higher the probability of gaining more assets on those models. And accessibility and low cost are wins for advisors and clients.

But the downside of wide distribution is that similar strategies are available to everyone, limiting the uniqueness of proprietary models you have access to and are marketing to your clients as a differentiator.

Why Fintech is the Answer

So if cost, easy access, and expertise are now just commodities in the asset management world, what can help you differentiate?

The answer is fintech.

A Better Client Experience at Scale

Enhancing the client experience and adding financial planning as a way to supplement your investing services are becoming the new way for advisors to stand out.  According to the Q1 Wells Fargo/Gallup Investors and Retirement Optimism Index survey published April 2019, 84 percent of investors still choose human advisors over automated investing tools. More than half (56 percent) of those investors, though, say they would prefer working with an advisor who uses automated investing tools to help the advisor manage their clients’ portfolios. This is why companies like Vanguard have introduced hybrid advice models that give robo users the option to access a real person for a fee.

McKinsey & Company reports that businesses, including advisory firms, focused on the customer experience and digital transformation strategies have a revenue growth rate five times greater than those that don’t. And, according to Cerulli, only one-third of advisors are actually providing financial planning.

But in order to provide a truly better client experience and add planning services, you need more time to spend on your clients and more time meeting with your clients face-to-face.  

Fintech provides the power to do more for your clients at scale by taking over the mundane but important processes of billing, reporting, monitoring for compliance, and more. All of that can be done more quickly and accurately with scalable tech that can grow alongside your firm.

Keeping Up With Trends

Many advisors continue to use old technology that is built around silos. This ultimately leaves them with considerable administrative burdens and operational tasks that take away from time spent with clients and their ability to create customized plans.  

Another way to stand out is to provide cutting-edge asset management that can harness the biggest, newest, and trendiest tools, such as direct indexing, hyper personalization, and tax management strategies, to benefit your clients.

Without technology, direct indexing — that is, replicating the performance of an index — was something only available to high-net-worth investors who could afford the high management and trading costs. Now, you can offer this strategy to all of your clients and at scale.

Hyper portfolio personalization, such as ESG screenings and sector and industry restrictions, is becoming increasingly popular, especially with millennials. With fintech, you can quickly and easily add personal preferences like avoiding any tobacco company securities or investing only in companies with green policies.

The same goes for deploying tax management strategies for all of your clients. No matter their tax bracket, your clients want their take-home amount to be the best it can be. By using fintech to tax-efficiently rebalance portfolios and take advantage of tax-loss harvesting opportunities, you can provide this traditionally tedious service at scale.

Getting Started with Fintech

At the end of the day, fintech can help you provide a better client experience at scale.

The growing popularity of the hybrid model suggests that consumers desire both a digital and human wealth management experience, and we are in the early stages of this evolution.  Technology will enable the change but humans will be the drivers of it.

Orion Portfolio Solutions can help you do all of that. Our turnkey asset management program seamlessly integrates fintech that is equal parts intuitive and powerful with flexible investment options and hands-on product support.

Get started today by contacting us at or 800-379-2513 option 5.