Really looking to disrupt the industry? Look beyond Fintech solutions, according to Morningstar's Don Phillips.
"Half of Americans that have the ability to invest aren't doing so, and I think part of the problem is the investment community doesn't really look that much like the community in general," Phillips said.
According to Pew Charitable Trusts research, less than half of nongovernment workers in the United States participated in an employer-sponsored retirement plan in 2012, the most recent year for which detailed data were available.
"We were thinking Fintech was going to be the solution for this," Phillips said. "Here's the irony: You take the old-boy network of finance and the young-boy network of technology and you put them together and say, 'This is the way to widen the community of investors to include gender and racial diversity.'"
Instead, according to Phillips, FinTech is coming up with tools and products for HENRYs: high earners, not rich yet.
"These aren't the people that are falling in the gaps," Phillips added. "These are maybe people that aren't served yet, but they're certainly going to be served at some point."
Phillips says the question the industry should be asking is, "How do we reach out to the people that are just ignored, or have turned their back on finance?"
"These are big, important communities," Phillips added. "And if things like 401(k) plans become the retirement savings plan of a whole generation of Americans of all color and all genders, we have a responsibility to step up and find ways to solve that. And that's not what I see the industry focusing on today."
The first step, according to Phillips, is making sure the financial services industries look like the communities as a whole.
"Get more women into the financial services industry. Get more racial diversity," he said. "That's step one so you understand where people are coming from so you can communicate effectively and serve them."
Phillips called this one of the "big failings" of the financial services industry.
