The (super)Human Touch for Wealth Management
Why did we invest in Farther Finance?
Every generation has understood the importance of passing on a legacy to those who come after them. Maybe it’s grandma’s wedding ring or a silver dollar your dad gave you that his father once gave to him. We treasure these things because it was important to the donor to pass them from their generation to the next.
While sharing family keepsakes matters, the most common type of transfer from one generation to another is financial wealth. This isn’t new. But what will make the next decade so remarkable is the sheer number of people — and the correspondingly large amount of money — transferring their wealth to their children and grandchildren.
Between $30 trillion and $40 trillion in assets will be transferred from Baby Boomers to their children and grandchildren over the course of the next two decades, as CNBC reported. The transfer of wealth of this magnitude has the potential to fundamentally change the way the financial industry conducts business.
Unfortunately, most of today’s wealth management services are provided by traditional wealth advisors that cater to clients with assets of over $1,000,000. This threshold is met by very few Millennials. In addition, these services are mostly performed manually and in-person. As a result, traditional wealth advisors only serve two percent of the market, which makes long-term wealth management success unattainable.
To fill this gap, robo-advisors began to gain popularity during the past few years. These apps (Betterment, Wealthfront, Robinhood..), built by non-bank fintech firms, made it easy for users to invest with a small up-front amount. Over time, robo-advisors have proven that a strong user interface and simple-to-use services are especially attractive and promote consumer loyalty. However, when dealing with larger sums of money (above $50k) and complex life situations such as marriage, the founding of a business, inheritance, or planning for children, the “human in the loop” was sorely missed.
Farther fills this gap by granting wealth advisors “superhuman capabilities” through state-of-the-art digital tools.
All About Farther
Farther is designed to enhance modern wealth management for affluent investors. With Farther, advisors can serve their clients with a suite of advanced capabilities such as digital communications, automated operations, AI-driven acquisition and servicing, and tailored investments.
Farther is ushering in a new wave of wealth management. It understands that while advisors are critical in gaining client trust, they must also leverage digitalization to survive and flourish in our digital era and provide its Gen-X and Millennial clients with the “superhuman” capabilities they expect.
It’s all about the agent!
Many industries have undergone massive digital transformations over the past two decades. The travel industry has shifted to online platforms such as Expedia, Kayak, and others; the E-commerce industry is bursting with endless online platforms, the banking industry offers new digital banks such as Revolut, GreenDot, Monzo; and the insurance industry has numerous online platforms such as Insurify and Lemonade.
However, in all these digital platforms where technology replaces human agents when the going gets tough, everyone ends up calling out for human help! The role of the “agent/advisor” has not disappeared. It’s just been redirected to where it adds unique value to the client. In other words, the agent is still vitally important when it comes to complex situations in which human education, advice, and judgments are still imperative.
The digitally-enhanced agent approach has become commonplace in many industries. This shift has been accelerated with the creation of very large companies that empower agents with digital tools. Some examples include TripActions (US $5B) which recognized and affirmed the importance of experienced, knowledgeable travel agents in business travel; Zillow (US $27B), an online marketplace for buying, selling, renting, financing, and remodeling homes, that despite its impressive array of AI technologies, eventually admitted that there is no substitute for professional human counsel. Zillow consequently partnered with local realtors to combine its AI tools with top-notch human services, expertise, and judgments; and Houzz (US $4B), a company that operates in the home decor industry that has created a platform for interior designers to reach and serve new clients.
The wealth management advisor is yet to be empowered in this way. When making life-changing decisions on savings and long-term investments, no algorithm, no matter how advanced, can replace the clarity and confidence inspired by professional advice. This has prompted us to invest in Farther Finance, the company that empowers advisors to deliver more for their clients.
Farther’s mission is to revolutionize the sole area in wealth management that hasn’t been digitally transformed yet: investment advisors. As opposed to robo-advisors such as Betterment and Wealthfront, whose average account is US $50K, Farther targets US $1M+ accounts, which are too large for robo-advisors, but too small to receive the attention of wealth advisors at most large wealth management firms.
Wealth advisors can subscribe to Farther’s platform and immediately reap the benefits for their existing clients. The solution offers client-centric, tech-enabled services that are not available to independent advisors today. These include: AI-based client relationship modules, portfolio research tools with data enrichment, and trade/investment execution. These services allow advisors to acquire more clients quickly, handle bigger books more effectively, and create more value for themselves and for Farther.
Farther’s founders, both MIT graduates, have vast experience in the wealth management space, having previously worked for Goldman Sachs and Fidelity.
So what’s the bottom line?
Farther enables wealth advisors to become superhuman when serving their millennial and gen-X clients. It allows them to offer client-centric, tech-enabled financial advice for the long term, in addition to acquiring more clients quickly, handling bigger books more effectively, and creating more value for themselves and for their clients.
We are very excited to partner with Taylor and Brad, the founders of Farther, and expect them to carry out the exciting revolution of the wealth advisors!