1. Future of Financial Advice
The Financial Advice market has been growing annually at about 15% over the last five years, clocking close to $50
Trillion investible assets in US alone – 60% of which being in retirement assets. However, just under half of this
asset base is serviced by Financial Advisors owing to their archaic operating methods, legacy technologies, high
cost of advice and conflict of interest. The capacity required to service the millennials lies in walking away from the
signature crawl of the advisory market place epitomized in manual processes, interrogative profiling of the client
and fee based model charged to assets under management.
As the millennials leave umpteen digital footprint out there in the social media, their expectation is not be bothered
with responding on their goals, risk profiles or life events. Signing reams of documents or even scanning and
uploading KYC forms is a drag. They would rather expect a service provider to mine their financial needs and
behavior and suggest an investment plan that benchmarks with their community. Nurturing such millennials in
maintaining a consistent long term association with the advisor is becoming an integral part of financial advice,
something that very few advisors are offering – at least digitally. Finally, the advisor needs to aggregate various
opportunities and access to the same, in rendering financial advice, and not just products or investment plans,
marketed by it. The future of financial advice belongs to Gamification, Social Analytics, Access Consolidation and
Value Aggregation.
The changing landscape of advisor technologies
The front office is getting replaced with Internet of Things (IoT). The middle office characterized by plethora of
product driven applications is buckling to cost effective Fintech Solutions and most of the back office systems is
moving to the cloud. Information, not money, is the new age currency. Opportunities are the new age products
and Financial Advisors have an enviable opportunity to become the “Bank”-of-the-future, as
 Custodians of client behaviors and social profiles
 Information Exchange, and
 Value / Access Aggregators
Impact on financial advisory processes
Financial Planning will no longer be driven by Investment Products, but co-designed and influenced by the
community that the client relates to. Gamification will keep the client (and concurrent data) coming into the
enterprise in place of standard questionnaires seeking investor risk profile and investment goals.
Advisors will be motivated for innovating client experience. The old guard segmentation into mass affluent, high
net worth or ultra-high net worth clients and prescribing respective investment products will be replaced with
financial nurturing. Asset Democratization across client segments will ensure that some value from each Product
or Solution is always accessible across client communities delivering greater financial inclusion. Finally, the Advisor
is seen as an equal opportunity Access Facilitator and Value Aggregator.
As Fintech Solutions replace conventional applications portfolio, there is greater degree of self healing and self-
learning systems. As a result, most of the Operations time is now spent in mining and analyzing data related to
clients, solutions, partners, pricing etc. than maintenance and upkeep of the IT systems.

2. Next Gen Levers of Financial Advice
Gamification, Social Analytics and Soft Skills define the future of Financial Advice.
Gamification will promise client engagement by adding a challenge, competition or feedback. The “Game” keeps
bringing back the client to the advisor, implicitly improves the investment quality and also facilitates non-intrusive
collection of valuable data from the client.
The game may either solicit a defined outcome, rewarding for compliant behavior (e.g. reporting certain
transactions, using a mobile channel etc) and penalizing for errant behavior for uninitiated clients. It could also
offer a choice of solutions encouraging creativity for more experienced clients.
Social Analytics will mine gigs of data collected from the client and business partners. Machine learning in financial
advice will innovate solutions for respective client profiles offering access to customized solutions, communities,
and opportunities.
Even as machines gain larger control of data churning, predictions, analytics and portfolio calibrations, advisors will
need to upskill themselves as Data Scientists, UX designers and Behavioral Psychologists.

3. Are Robo-Advisors and Block chain relevant?
The current breed of Robo Advisory platforms are simply automating some of
the most cost inefficient functions like asset allocation and risk profiling.
Further, the popular business model of adding scale and charging a fee for
expanded assets under management itself is self-defeating in long run, as it
ignores financial nurturing and planning for the client – a task that should have
been automated first. Already very similar predictions are made by a bunch of
Robo-Advisory solutions, for a given investor profile, even as their appetite for
risk, ability to service the investments and financial goals may have differed.
Once the novelty dies out, only those platforms would survive that truly
harness the technology to mine client behavior and influence investment
planning, powered by custom user experience.
Block chain does promise to be a significant disruptive force – not only in asset
allocation but also in mining the client and creating communities of interest.
Block chain technology could identify potential opportunities for investors,
based on near zero cost, almost instantaneous and confirmed transactions
across “nodes”.
The Revenue Model
Charging fee for assets under management or commissions as an intermediary would be history. The advisors will
earn revenue by capitalizing the brand they build. The brand would be recognized for the value of advice perceived
by the clients. Such value is a combination of
 Discovering investment goals through powerful analytics, at times not even visible to the client
 Identifying, aggregating and providing access to self-paying opportunities
 Ability to seek consistent participation from the client (e.g. through gamification)
Excluding any of the above components from the ambit of financial advice
will render an ineffective plan. For example, if relevant goals cannot be
identified or achieved, the advice will only render a notional win. This may
happen even if the investor is making contributions and the plans are
generating returns. Either due to lack of liquidity, or inability to apply the
returns to intended financial goals, the investor may not benefit from the
advice. Similarly, if the goals are identified, and so are the opportunities,
but the investor fails to keep up regular contribution, the goal would only
remain a distant wish. In the event where the investor pays for its goals,
but the money is not working for itself, the investor may see that as a poor
advice. So long as the three are in tandem, the value of advice appreciates.
So does the brand.
Please send your comments to Avinash Kumar