Technology and Big Data are Bringing in a New Wave of Financial Advising

Thanks to tech, investors have so many more options now than they did in the past, including a multitude of choices for financial advising — however, that may be exactly why so many investors are opting for human advisors. In a fast-paced, automated world, it’s a treat to sit down with a real person who will walk you through your investment options. The financial advisors themselves may be using tech to analyze big data, but the investor can work with a human instead of relying on an app or a bot.

Working With a Financial Advisor

Financial advisors are a great option for investors who want a human touch as opposed to only communicating with bots. Advisors use big data and analytics to predict changes in the market, as well as to learn about their clients and discover their needs. This lets them be proactive about how they help clients, and clients are more satisfied and trusting of their advisor as a result. To help with investment decisions, financial advisors regularly research the market, then connect with clients to update them on changes, come up with an investment strategy, and take action.

There are two main ways that brokers will carry out a trade: Dealing Desk and Non-Dealing Desk. The difference lies in how a broker gets paid. Forest Park FX explains this distinction:

“Generally, the Dealing Desk broker will make its money through the spread and managing the risk associated with taking the opposite of its clients’ positions. A Non-Dealing Desk execution model is one in which your trading broker aggregates pricing from a variety of liquidity providers and then shows you the best bid and offer. The Non-Dealing Desk broker will generally make its money by charging a commission.”

In short, Dealing Desk trades can be handled more quickly, while Non-Dealing Desk trades may cost the investor less.

Financial advisors don’t just talk to their clients about the smartest investment decisions — they can also make investments for them. In addition to helping with investment decisions, financial advisors can work with clients on other components of their financial health. For example, advisors may offer information about retirement savings, large purchases, and taxes.

How Financial Advisors Use Big Data

There are four different types of analytics that financial professionals use: descriptive, diagnostic, predictive, and prescriptive. The first three (descriptive, diagnostic, and predictive) examine the past to determine why something is happening now or what will happen in the future. Prescriptive analytics help financial advisors come up with a solution in order to achieve a goal.

Here are just a few ways that analytics can help advisors better understand investors:

• Clients can be segmented based on behavior, and advisors can automate client service based on action.
• Communication can be personalized based on each client’s personality.
• By predicting client life events, investors can more accurately identify financial goals and come up with solutions.

Instead of relying on bots to do the work, advisors use big data as a stepping stone. They look beyond the surface to extract deep insight from the numbers, and they’re adept at using what they learned to come up with solutions for investors.

Taking Chances for Greater Reward

Investors generally want to create long-term revenue. According to SmartData Collective, “If you want to generate consistent profits, it is of utmost importance that you concentrate on the entire journey as opposed to the rewards at the end.” By looking at the big picture instead of worrying about short-term gains, you’ll have the freedom to test out all sorts of trading systems with your financial advisor.

Even if you have several losses in a row (or several wins), you’ll know that you’re playing a long game, which will help keep you focused and give you a way to frame your decisions. You won’t get upset at the losses or overly excited at the wins, because your real goal is making profits for the future in a sustainable fashion.

More Resources for New Investors

When you’re not working with your financial advisor, you may want to do some research on your own. Here are a few resources for investors who are new to the market:

• Bloombergmay sound intimidating to new investors, but the app is user-friendly. You can build a custom feed in order to watch the currencies, mutual funds, and stocks that matter most to you.
• Motifis great for the millennial investor who wants to put their money where their values lie. You can create an investment portfolio based on what’s most important to you, like creating a sustainable planet or living a healthy lifestyle.
• Wall Street Survivorwill get you up to speed on the basics with numerous articles and videos. There’s even a game to let you practice making stock market decisions without risk.

Investing may fascinate some people, but if they don’t know how to make investment decisions, they may never make any money — or even get started in the first place. Getting the right type of guidance and understanding the realities of what you’re jumping into is important. Luckily, between experts and intelligent technology, it’s possible to get up to speed when it comes to investments and make the best choices for your financial future.