This time on WealthTech Unwrapped, Eric Mellor joins Ned and Dani to examine the role of technology in the wealth management space. It’s evident that emerging technologies have been modernizing financial services, especially toward accessibility for the underbanked and underserved populations. However, Eric suggests that despite the success of disruptive digital technologies like Robo-advisors, a disparity still exists as solutions are not as diverse. Furthermore, by automating services to increase cost efficiency, consumers are likely to bear the responsibility of acting decisively, even if they’d prefer thorough and personalized advice. As investor goals are impermanent and based on individual life experiences, algorithm-driven financial planning services might be unable to react to shifts as attentively as human advisors.
Speaking of the advice gap, Eric posits that the industry would be hesitant to promote change if the models are not commercially viable. It’s up to the regulatory bodies to establish a structure for financial advice that protects the welfare of businesses and consumers. Of a more moderate solution, financial literacy is an important factor in elevating the advice gap since most investors are unaware of the merit of investments even if they’re within a favorable environment. Education has to start at the grassroots level in order to equip investors with proper knowledge to manage their wealth. Additionally, until technology can reach a sophisticated level of accurately understanding human behavior, human intervention remains crucial.