Fintech Is a Tool, Not an Obstacle, in Client Service

Underneath all this is the massive generational wealth transfer from boomers to their millennial children. While advisors are trying to find their place among competitors that are more likely to be technology firms rather than financial firms, they're also having to navigate new client attitudes and behaviors.

"For a business long understood as mature, financial planning technology is now approaching the future at lightspeed," Trout wrote. "A longstanding vendor arms race, built on the increasing complexity of solutions, now tilts toward ease of use. This focus on a more intuitive workflow reflects the preference of the advisor, as well as that of an end client increasingly engaged through digital portals."

The paper outlined five D's the financial services industry must address to serve clients:

• Digitization: Integrating physical and digital channels for both advised and DIY investors
• Data: Seeing (and protecting) data as an asset that can be monetized
• Demographics: Boomers are drawing down retirement accounts or transferring assets to a generation of tech-savvy investors who want to be in control.
• Distribution: End users have more control over how they access investments and what they pay for it.
• Democratization: Asset classes formerly limited to wealthier investors are more available to mass affluent people, and clients are more engaged in the portfolio decision making process.

The report acknowledged the difficulty in addressing these issues, but argued the long-term benefits for firms that take a dedicated approach will outweigh the challenges. "Indeed, the more firms invest in strategy now, the less repositioning they will need to do in the future," Trout wrote.

— Read New Solutions for Familiar Retirement Challenges on ThinkAdvisor.