See the explosion of online financial planning platforms

Financial planning companies are now emphasizing on mind mapping in the process of financial planning. What is significant about mind mapping in the financial planning context is that the data gathering meeting shifts from a one-sided interview process into a more interactive and collaborative financial planning experience. Clients aren’t just answering the planner’s questions. Instead, they’re working together to build something that takes shape before their eyes.

Next, an explosion of digital wealth platforms and technology solutions is happening and all this is capturing the attention of advisors, the trade and general media as well as consumers. Many of these new technologies are being developed by private company start-ups with venture capital funding. They offer a host of solutions ranging from algorithm-based portfolio construction and account aggregation to simple online financial planning. Today, financial planning is becoming more delineated. While investment management can be automated, financial planning for high-net-worth individuals, and estate and trust planning is harder to systematize; it makes sense for advisors to offer those services with the help of specialized software. Talking in the similar context, a term "robo-advisor" has come up. However, the term robo-advisor is considered derogatory by some as it suggests that the platform performs its services like a robot, mindlessly executing tasks. This is both a key benefit and a key perceived fault. The benefit is that a well-programmed, algorithm-based platform will execute complex tasks without any possible human failure. The perceived fault is that the platform does not have human flexibility and the ability to react to broader issues that affect portfolio construction. However, others embrace it as it brings attention to the growing industry.The other common names, such as a digital wealth platform or an automated online financial planning or advice platform, hardly roll off the tongue and can be misleading. A leading alternative is automated investment service. In any event, early animosity between robo-advisors and advisors has abated as they have realized the advantages of each other’s business models. Today, the term has become commonplace, and from a robo-advisor perspective, it is a straight forward Google search name that has achieved a high level of recognition.

The robo-advisors are true disrupters. Investors, sometimes from outside the industry, identified opportunities in the advisor market, which they believe create an opportunity for entrants with a different approach. Among the most obvious is the cost of financial advice. As many advisors have moved to the wealth management model, the standard fee for services has averaged about 100 basis points (bps), regardless of what services are actually rendered, from planning and advice, to implementation, monitoring and rebalancing. At the same time, advancements in technology have automated many of these functions, especially rebalancing, which is now available on most platforms.

I write article On behalf of Wealthcareindia.com, a leading Wealth Management & Financial Planning Company in Delhi, offers Online Financial Planning, SIP Investment or SIP Mutual Funds services by Certified Financial Planner.