The future of finance – Guest Editorial

By Leo Guiterrez, a professional SEO and online media expert 

The finance industry is undergoing a massive transformation. Indeed, the internet and its accompanying information technology developments have meant that the traditional financial services industry is fast becoming a thing of the past. 

From the rise of robo advisors to discount brokers to investment apps, the financial industry is almost unrecognizable to someone from just a few short decades ago. This has increased the level of accessibility of financial services to a level unthinkable to previous generations. 

Traditionally, financial services were an exclusive enclave of the very wealthy and well-connected. Financial advisors and brokers catered to a small list of clients and charged them very handsomely for their services. Investment vehicles would be created, and the few people involved would get even richer. 

Nowadays, the barriers of entry into the investment world have all been toppled down. This has been done in every conceivable way, with a whole host of benefits for the ordinary person on the street. Data driven technology will continue to revolutionize investments in favor of the consumer. 

Lower Investment Minimums

Traditionally, one of the biggest barriers to entry was the high investment requirements. The traditional financial services industry involved expensive sales charges and management fees. All of this meant that a certain amount needed to be invested to generate the economies of scale needed to make everyone money. 

Fortunately, these overhead costs have been greatly lowered by the introduction of information technology into the industry. As an example, the use of robo advisors, while not completely free of charge, nonetheless represents a massive improvement in cost effectiveness. This has enabled online advisories to lower the investment amount needed to cover the operational costs of a particular investment account. 

This has allowed an increasing number of people the opportunity to invest their funds into something other than a time deposit or savings account. The introduction of middle-class funds into the investment arena has also enabled greater amounts of new investment into the economy as trillions in additional investable capital have now come online. 

A More Comfortable Retirement

Traditionally, the way to secure a comfortable retirement was to unionize and demand pension plans from employers. The risk to this methodology was that this pension system was tied to a specific employer, thereby consigning people to jobs for life regardless of whether they enjoyed their work or not. 

In the 21st century, this inflexibility is no longer a necessity to a secure retirement. Instead of demanding pensions or saving massive portions of their incomes in low-yielding savings accounts, the middle class can now participate in global bond and equity markets by starting an online investment account. Because of how cheap and easy this has become the investment world has been opened to just about anyone living in the industrialized world. 

Pure Convenience

With traditional investing, assuming you were able to even get in, changing investment portfolios and seeking advice was not just expensive, but cumbersome as well. In addition to charging enough fees to cover large overhead costs, advisories and brokerages were usually open during office hours. This presents a big problem if you too worked during those exact same office hours. 

But with the online investment world, this issue goes away completely. Using robo-advisors and investment apps, ordinary people can receive objective advice and act on it wherever an internet connection is present. Online investors benefit from real-time advice from the number crunching of AI pointing out possible trends or projections, and the ability to execute necessary trades quickly. 

To surmise: dramatic improvements in accessibility are fated to get even better with advancements in artificial intelligence on the horizon.  Those who fail to adapt to new processes might ultimately end up lack a competitive advantage.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.