
From Fintech to Retiretech: Will the Retirement Industry Keep Up?
Fintech firms have been propelling the financial world in a new direction for much of the past decade. Many people are now familiar with the ubiquitous advancements in mobile banking, the advent of robo-advisors that have streamlined investment planning and decision-making and even the myriad of budgeting tools now available across the board. These advancements have changed our expectations of financial services firms when it comes to banking and investments – but what about retirement?
First, let’s look at the magnitude of investments in fintech. In 2018, there were 659 investments in fintech startups in the U.S. alone, which generated $11.9B in funding – record highs on both fronts. Where is that money being spent? There are a range of sectors on the receiving end, including online and mobile banking, mobile payments, peer-to-peer lending platforms, crowdsourcing, accounting software and mobile brokerage apps.
While investing, money sharing and everyday banking are being addressed, what about other sectors within the financial industry? How are preferences changing there? Research from PYMNTS.com’s “Where Will We Bank Next?” found that consumers are looking to expand their horizons beyond traditional financial institutions. This is important for those managing retirement income and looking for new and innovative ways to help solve the retirement crisis.
It’s important for a few different reasons. For one, the gig economy is growing, and these workers need better solutions to help save for retirement. Some fintechs are making big investments here, like Uber, who is looking into ways to help its independent contractors better save through traditional or Roth IRAs.
Yet, while fintech has greatly impacted many sectors within the financial services industry, the retirement industry has lagged behind. Retirement planning is complex and needs a coherent approach that takes into account things like financial assets, risks levels and personal preferences. The same computer algorithms that have revolutionized financial advice and investment portfolios have the potential to reform retirement planning, as well.
So, where does the retirement industry stack up as of now? First and foremost, more needs to be done to boost overall retirement readiness and access to workplace savings plans for more Americans. Continuing to reconnect people with their savings, as well as providing access to innovative retirement savings options should be a priority.
The industry as a whole has lagged behind other financial sectors, but new technologies and digital platforms have already shown to help increase transparency, access and education for individual savers and investors.
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The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.