Codal’s leadership team recently attended the Morningstar Investment Conference in Chicago, where financial advisors gathered to explore the freshest research and insights on all things finance.
Having built, implemented, managed, and optimized fintech solutions for organizations like Charles Schwab and GCM Grosvenor, our team was excited to connect with leaders in finance to learn about their most pressing challenges in 2024, as well as share how new technologies like AI are being utilized to enable smoother operations, greater client engagement, and higher returns.
Here were some of our key takeaways from the conference:
Private equity is outperforming the public sector
Over the past 20 years, the private equity market has produced higher ROIs than the S&P 500, due to its ability to operate with longer investment horizons and greater flexibility. Unlike publicly traded companies, which face quarterly earnings pressures and market volatility, private equity firms can focus on strategic long-term growth initiatives without immediate shareholder scrutiny. This approach allows them to achieve higher returns by executing operational improvements and strategic transformations within their portfolio companies.
Account aggregation is a top priority
Account aggregation involves consolidating financial information from various accounts into a single platform, providing users with a comprehensive view of their financial health and investment patterns. This centralized access enables better budgeting, expense tracking, and financial planning, empowering individuals to make more informed decisions about savings, investments, and debt management. Moreover, it provides greater convenience by reducing the need to log in to multiple accounts separately, thereby saving time and effort in managing finances for both advisors and their clients.
Compliance management is an ongoing challenge
Financial advisors must navigate a complex web of regulations and guidelines. As these regulations evolve and become more stringent, they face increased pressure to ensure their practices adhere to compliance standards to avoid penalties and maintain client trust. Embracing technology solutions that automate compliance monitoring and reporting processes is crucial for advisors aiming to grow their operations while staying ahead of regulatory changes.
Financial advisors are differentiating themselves with personalized service
Financial organizations offering a cookie-cutter approach to investments, savings, and debt management will continue to lose their competitive edge. Advisors now have access to digital solutions for gathering and analyzing client data to offer more tailored recommendations and services, based on their client’s unique financial goals, demographic, and risks. A personalized approach not only leads to better ROIs, but also strengthens advisor-client relationships by demonstrating a deep understanding of each client’s financial situation.
Effective communication is essential to combatting client forgetfulness and aligning their expectations with delivered outcomes, especially in clarifying specific services and simplifying complex financial jargon.
Advisors should anticipate and address client challenges promptly and empathetically, steering clear of standardized solutions and instead fostering informed decision-making through conversational advice and clear explanations. Regularly reinforcing the tangible benefits of long-term investment strategies in personalized "Progress Sessions" helps sustain client engagement and loyalty, mitigating reasons for dissatisfaction and potential advisor turnover.
3 predictions for the future of fintech
The financial landscape is evolving rapidly, and no one can predict the future with 100% accuracy. But we can say one thing for certain: Advisors with the most robust, scalable digital tools for aggregating and analyzing data across various systems will be in the best position to predict market behavior, improve their client experience, and leverage upcoming AI capabilities.
1) Market instability due to geopolitical issues
Upcoming elections, disputes over natural resources, disruptions to global trade, and other geopolitical tensions lead to increased market volatility, impacting investment strategies and client portfolios. Advisors must stay vigilant with an agile approach, continuously monitoring global developments and adjusting their recommendations to mitigate risks and capitalize on opportunities for clients amidst an uncertain political climate.
2) Growth in long-term private market investments and model portfolios
The finance industry is seeing a notable shift towards long-term private market investments and model portfolios, reflecting a growing preference among private and institutional investors for strategies that offer stability and potentially higher returns over extended periods. Advisors are increasingly structuring model portfolios with diverse private market assets, such as private equity, real estate, and venture capital, aiming to optimize risk-adjusted returns for their clients. Thus, the demand for advanced account aggregation tools continues to grow. Embracing these longer-term investment horizons allows advisors to capitalize on opportunities not readily available in public markets.
3) Increased reliability on AI
AI will revolutionize how financial advisors operate by automating workflows and enhancing efficiency across disciplines, resulting in greater productivity, and ultimately the freedom to put more time and energy into the client-advisor relationship. Deep learning algorithms will sift through vast amounts of data to identify nuanced investment opportunities and trends that human analysis might overlook. This capability not only accelerates decision-making processes but also enables advisors to provide more personalized recommendations, tailored to each client's unique financial objectives and risk tolerance. Embracing AI-driven tools will be essential for advisors aiming to stay competitive, forge stronger relationships with clients, and deliver higher returns in an increasingly dynamic market environment.Implementing forward-thinking solutions for financial services
Codal designs, develops, tests, launches, and maintains cutting-edge digital products for financial service companies, from marketing websites, to mobile banking apps, to internal compliance tools, to financial data analytics platforms. We’re helping advisors and other financial experts better manage their data, integrate disparate systems, unlock the power of AI, and more.
With 15+ years of experience in the industry, we’ve got the resources and expertise to equip teams with best-in-breed tech for driving operational efficiencies, personalizing the client experience, and improving financial outcomes.
