Innovation is a huge part of our history. Always met with caution and then embraced as the norm; the time has come for the investments industry to be reinvented. Can you afford not to say yes to the new wave of digital wealth managers?
The industrial revolution has been and gone, it completely changed the way goods were manufactured and transported. The industrial revolution improved the lives of millions and enabled individuals and products to move around the UK. Many are siting the current time period as the technology revolution. Digital is opening up markets to huge swathes of individuals who had never before been able to experience a particular product or service. Not only that, but it is enabling us to do things more quickly, demand a better experience and costs are falling dramatically.
Often digital innovation is met with caution – how can you trust a machine to do the job of a person? But often you are not dealing with a ‘robot’ instead it is that same service put together by an individual you know and trust but new digital tools mean that it is a lot more efficient.
Met with caution – but now the norm
It isn’t the first time in our history that we have been reluctant to embrace a new development. In 1903 the President of Michigan’s saving’s bank said “The horse is here to stay but the automobile is only a novelty—a fad”, he said this to Henry Ford’s lawyer. Now over 100 years later a record 2.6 million cars were sold in the UK in 20151 and Ford is one of the most recognised brands in the world. The horse is still an important part of the modern world, but is more commonly associated with sport and recreation.
In 1955 Variety Magazine said “rock’n’roll will be dead by June” but by the end of the 60s it was seen as force of cultural and political consequence2. What was then rock and roll can be heard across modern popular music; it is the music that has shaped a generation, not only of musicians, but also politicians and business leaders. Influences can still be heard 60 years later, all from a music form that was seen as completely outrageous.
Many saw online shopping as a temporary trend when it first arrived. Amazon launched in 1995 and took 9 years of operation to turn a profit3. Many questioned whether remote shopping was something needed by society, or if it was indeed the conversation with the in-store salesperson that helped with a buying decision4. But in 2015 online shopping was crowned king and the Telegraph told high street stores to “adapt or die”. Technology not only enables us to shop from the sofa but it also enables personalised deals that we are coming to expect from all services.
The wealth management revolution
The ‘new wave’ of online wealth managers are attempting to do what online shopping did for retail, to financial services. Your investments should be accessible and an investment strategy should be designed with the customer in mind. Even with the regulation in financial services there is no reason why financial products can’t focus on the customer.
At MoneyFarm we develop our own technology and put behavioural finance at the heart of our strategy. Wealth management should be about understanding customers and creating products designed around their long-term financial goals. Our pioneering use of technology and scale means we can offer savers a smoother customer experience, better risk-weighted returns, all at a lower cost than incumbents. Our approach to fees turns the traditional pricing model of wealth managers on its head, changing the age-old practice of unlimited fee increases.
Is it time to say no to the status quo and embrace this digital financial service?
1 Auto Express, 2016
2 Rolling Stone, 1990
3 New York Times, 2005
4 Business Week, 2010