We are surrounded by disruptive technology — groundbreaking advances in products and services that are changing entire industries. For financial advisors, the most obvious example may be “robo advisors” such as Wealthfront and Betterment. However, the potential impact for advisors is much greater — and so are the opportunities.
As the number of millennial, tech-savvy clients increases, the need for more self-directed, technology-focused services will grow. Millennials expect a fast, customized, hands-on product and service experience — and nothing less. A look at just one industry — health care — illustrates how advisors should be thinking about the effects of technology on financial planning.
Disruption in health care — and implications for investors
Disruption is already well under way in health care. We are seeing a rise in high-deductible and consumer-directed health plans, and individuals are much more knowledgeable about health-care cost and service options.
In the next few years, technology will drive down the cost of health-care services, leading to lower recidivism rates and lengthening lives. By 2020, 30% of deaths in the developed world may be postponed by health-monitoring solutions like those offered by smart technology wearables. Increased longevity will change investing needs and push the financial services industry to change with them.
Silicon Valley-based start-up Color Genomics has created a simple, affordable way for women to conduct at-home screening to help diagnose breast and ovarian cancer, with results delivered in a fraction of the usual time. Other wearable technologies allow consumers to monitor biomarkers that previously could only be checked at a doctor’s office. Affordable devices will help with conditions that need constant monitoring, and patients can track patterns and determine changes that may help increase their life span.
A contact lens being developed by Google offers promise for the more than 29 million people living with diabetes, a population that has increased 165% since the year 2000. The lens will use tear fluid to measure blood sugar levels and quickly send data to the patient’s mobile device. Patients will be able to constantly monitor blood sugar and be alerted instantly of abnormalities. Google is on track to launch the smart lens within the next four years.
With tools such as these, considerably more individuals will get a clearer picture of their life expectancy, which is likely to change their financial planning approach.
Companies like HealthEquity provide an application that organizes health-care information, displays costs, and provides a library of resources to help consumers get the cheapest, best health care possible. Other companies like ZocDoc and SimulConsult provide access to expert advice, information on local doctors, and the ability to schedule appointments online. Individuals have more control over their health-care spending and are quickly finding the most cost-effective options for care.
If something as personal as health-care management can be transformed by technology, so can investing. As consumer expectations will shift across all industries, individuals will want more direct access and control of their investment portfolios. Asset allocation, planning, and retirement income models will need to change to accommodate advances in technology as well as significantly longer life spans.
Putnam Retail Management.