Technology is helping to make alternative investing more accessible to financial advisors, asset managers, and their clients. Embarking on a symbiotic journey over the last decade, the tech and alts relationship will continue to accelerate in the coming years, creating a more frictionless pre-trade, trade, and post-trade investing lifecycle that will help advisor teams do their job more effectively while also providing one-stop service.
What you’ll learn
We explore the rise of fintech, its role within the finance industry, and how it is improving access to alternative investing.
Fintech platforms have the ability to redefine the alternative investment landscape by providing collaborative connections, automated workflows, seamless reporting, and data-driven insights.
Advisors should consider the trade-offs that are associated with implementing modern fintech solutions.
CAIS is at the forefront of this technology revolution, redefining how advisors can discover, transact, and service alternative investments for client portfolios.
The emergence of fintech from a trend to a cornerstone
In the last decade, we’ve witnessed a seismic shift in the wealth management landscape. Financial technology, or fintech, has driven the industry forward, thanks to new tools that have made investing easier, cheaper, and more accessible.
Adding to the immense growth over the last decade, technology continues to accelerate thanks to recent innovations in the industry. And new breakthroughs, such as artificial intelligence and blockchain technology, will continue to drive industry growth in the coming years. In fact, Allied Market Research estimates that fintech’s market size will grow to $698 billion by 2030, a dramatic increase from $110 billion in 2021 (a 20.3% annual growth rate).
This rise of fintech has provided financial advisors with new tools that make it dramatically easier to provide quality service to their clients. Digital financial planning, investment management, estate planning, and tax planning tools for example—can make it easier for advisors to manage the total financial picture for multiple clients. These tools are becoming industry-standard, often making advisors’ lives easier by reducing the need for extra meetings or administrative back and forth.
Perhaps one of the best parts of the fintech revolution is that it’s making alternative asset classes and products more accessible to the masses, as well making the ability to service these investments more streamlined. In particular, platforms like CAIS have made it easier for advisors and their clients to invest in, and manage, alternative assets.
Fintech's impact on wealth management and alternative investing
Alternative investments, which include private equity, private debt, hedge funds, and real estate (among others), are growing rapidly in popularity. PwC estimates that alternative asset classes will more than double in size, accounting for 15% of global assets under management by 2025.
Prior to the fintech revolution, investing in these assets was essentially reserved for institutional investors and high-net-worth individuals. However, fintech platforms like CAIS are making alternative investments more accessible to financial advisors than ever before, directly connecting financial advisors with leading alternative asset managers. By either leveraging a turnkey solution or customizing a solution to fit more complex needs, advisors can now offer alternatives to their clients with minimal additional effort.
The benefits: fintech’s value propositions
A frictionless customer experience
Through technology, platforms like CAIS strive to provide advisors with access to a breadth of alternative products with the potential to meet this wide range of objectives, while seeking to streamline the way that they research and make decisions. Coupled with industry leading custodian and reporting provider integrations – the friction to discover, diligence, transact and report is greatly reduced.
In today’s fast-paced, competitive market, access to timely data has become the norm. By leveraging a premium platform in the alternative investment space, advisors and asset managers can receive real-time data, and superior visualization tools. Providing these audiences with analytics and insights that enables them to make informed decisions for their clients, educate their clients more effectively, and communicate more seamless across client types.
Automated workflow optimization
Just like most industries in the world, technology has drastically improved workflow in the wealth management industry. Stock trades that used to take days to settle can now be completed in seconds. Transfers that used to require weeks can be completed in just 1-2 days. Schedules that used to be filled with meetings are now freed up thanks to online investment platforms and client portals.
These automation advancements are streamlining operations, making life easier for both advisors and their clients. And it’s no different in the alts space - time-saving features like digital sub docs, smart AML/KYC, and CAIS DocuSign help advisors save time and reduce costs.
The drawbacks: fintech’s obstacles
The inevitable learning curve
Despite its advantages, adopting new technology also means learning how to use new systems, processes, and tools. This can create a bit of a learning curve. However, this short-term sacrifice is usually more than worth the long-term benefits. And this can be mitigated by proper training materials, demos, and online educational portals. For example, CAIS not only offers demos and how-tos but also provides advisors to foundational education through CAIS IQ, our integrated, on-demand online learning experience. CAIS IQ courses are designed for independent financial advisors and are available for most products and asset classes on the CAIS Marketplace.
Legacy vs. new operational management
As the financial industry grows more reliant on technology, regardless of where an advisor is their adoption of alternative investments and whatever state a practice’s alternative operations are in, with better ways available to advisors, advisors generally end up managing their alternatives in two ways – new workflows and old workflows. This is why it’s incredibly important to find a platform, like CAIS, that allows advisors to bring all their alternatives, legacy or new, no matter where they find them.
Embracing the fintech revolution
The impact of fintech on alternative investments is undeniable. Its conveniences are unrivaled, but it also comes with its own set of challenges. For forward-thinking industry players, the goal isn't just to adopt fintech but to do so wisely and intentionally.
CAIS: Pioneering the confluence of fintech and alternative investments
The union of fintech and alternative investments has the power to redefine how independent advisors operate. Right now, over 32,000 advisors are already signed up with CAIS to help bring the potential benefits of alternative investing to their clients. We’re helping lead this revolution by being a champion of the independent advisor, every day.
Advisors slow to adopt alternative investing could run the risk of falling behind their peers. . In our recent CAIS-Mercer survey, 83% of advisors surveyed believe alternatives differentiate their practice from their peers.
The collaboration between tech and human expertise
Financial technology has drastically improved the financial industry and empowered advisors to offer the highest level of service to their clients. But, as technology improves, so does the level of service that advisors must offer. Moving forward, advisors will be tasked with the difficult responsibility of meeting their clients’ increasingly high demands.
As such, the wealth management industry, especially in the realm of alternative investments, requires a delicate balance of technology and real-life interactions. Advisors must leverage the newest tools while continuing to provide the highest level of advice and support to their clients.
In turn, tech platforms that support these advisors should follow suit, providing them with dedicated, personalized service and focusing on genuine human engagement.
The evolving road ahead
As the world moves towards an increasingly digital era, the onus is on platforms like CAIS to keep up with evolving demands. Be it in the realm of artificial intelligence, big data, or blockchain, fintech is entering uncharted territories at breakneck speeds. And while these advancements are revolutionizing how advisors and other industry professionals evaluate and seek out investment opportunities; they also underscore the importance of staying updated, trained, and adept.
Platforms like CAIS, armed with tech prowess and a deep understanding of the human side of wealth management, are poised to lead this revolution