FinTech Is A Business Imperative

With the COVID-19 pandemic having accelerated the digitalization of insurance and financial services to a previously unseen pace, one might assume our industry has made progress on closing its long-running technological gap. Not so, according to a January 2022 MDRT survey on FinTech ( First, the good news: The survey results reaffirm the value of and need for human financial advisors for Americans of all ages. But the results also reveal ongoing disparities between consumer expectations of FinTech incorporation and what clients are seeing from their insurance brokers.

These consumer expectations will continue to rise, making it more and more difficult for brokers who are already behind to catch up. As we hurtle toward an ever more digital future, effective incorporation of FinTech will make the difference between brokers who prosper and brokers who struggle to keep afloat.

Incorporation and Communication
According to the survey results, 41 percent of Americans have a human financial advisor. While this underscores the continuing importance of insurance and other financial planning professionals, it also means a wide range of knowledge and comfort with technology from clients. Insurance brokers must be ready to meet clients where they are—and the more technology they can effectively use within their practice, the easier that task will be. Fifty-six percent of Americans want their finances handled by a mix of people, robo-advisors and other technological tools, but the exact balance will vary from client to client.

The best thing FinTech can do for an insurance broker is enhance their ability to build genuine relationships with clients. This was the real benefit of virtual meeting platforms in 2020 and 2021—if broker-client relationships were purely transactional, everything could be handled over email alone. But clients want more—the survey found that 51 percent of consumers want financial services professionals to use multiple communications platforms. Most clients will not email you, follow you on Instagram and watch your YouTube videos. But the more options for engagement you present, the easier it is for clients to engage with you on a platform they already use.

It’s also important for brokers to communicate the technology they use behind the scenes. According to the survey, 75 percent of consumers find it extremely or very important that financial advisors use cybersecurity tools like password managers or two-factor authentication. But only 35 percent of clients report their advisor using such tools. Some technologies, like social media, are very visible. Cybersecurity is not. Even if it will never directly impact an insurance policy, brokers can still take the opportunity to deepen clients’ trust in them by explaining their personal cybersecurity toolbox.

Proactively communicating your technological options and capabilities will also help prevent clients from being disappointed when you can’t use their favorite program. Insurance and financial services professionals often have stringent compliance requirements around technology usage, meaning we often cannot accommodate sudden client requests. Demonstrating the tools you already use and your confidence in them will boost your clients’ confidence in you.

Embracing Digital Finance
Even as financial services professionals’ technological options grow, so too does the popularity of robo-advisors. The MDRT survey found that 17 percent of Americans currently use a robo-advisor service, including 21 percent of 18-29-year-olds and 26 percent of 30-44-year-olds. Robo-advisors, clearly, are an established part of the financial services landscape. So how are brokers and other advisors to compete with them?

We may not actually have to compete with robo-advisors at all. According to the survey, 69 percent of robo-advisor users also report having a human financial advisor. Robo-advisor users are also just as likely as non-users to say that they want human involvement in managing their finances. Insurance brokers may not even need to significantly adjust their prospecting to account for these new platforms. Most robo-advisor services focus on investments—they do not cover life, long term disability or other insurance policies that most Americans will still need at some point in their lives.

Another trend that’s clearly here to stay is learning about finance and investments through social media. The MDRT survey found that 68 percent of Americans use at least one social media platform for this purpose. We use social media for everything, so it was probably inevitable that we would start seeking out financial information on social platforms. Younger Americans, especially, are also receiving financial content from places not necessarily associated with serious financial planning. Among 18-29-year-olds, 31 percent are learning about finance or investing on TikTok, 28 percent on Reddit and 21 percent on Discord.

Insurance brokers do not need a dozen social profiles to chase clients and prospects across the internet. They do need to know how to combat financial misinformation. It’s not that social media is a particularly worse source of knowledge—even financial advisors and insurance brokers can be wrong after all. Rather, brokers must internalize that it’s no longer uncommon for Americans to trust the people and pages they follow on social media as much as they trust family, friends and coworkers. Clients will still tell brokers about the “brilliant” idea their sibling had at Thanksgiving, but they will also talk about Reddit and Facebook now too.

At the end of the day, the digital demands of our industry are driven by clients and prospects. Brokers can choose to be caught in a never-ending game of catch-up, or they can take the necessary steps now to embrace the altered landscape. The brokers who take the latter approach will see their clients feel more satisfied and their practices not just grow but thrive.

Paresh Shah has been a wealth strategist for 17 years, specializing in pension and profit-sharing plans, asset protection, estate planning and business succession. He was a co-host of the talk show “Your Money-Your Taxes” on the South Asian American channel ITV Gold. Shah is a 15-year member of MDRT with three Top of the Table and nine Court of the Table qualifications. He resides in Hicksville, NY.

Shah can be reached at PareShah Partners, 960 S Broadway Ste. 115-B, Hicksville, NY 11801.