by Chris Eassa of Envisage Information Systems

In the recent article titled “How to More Effectively Use Big Data to Serve 401(k) Participants,” we introduced the idea of a financial life network. Today, the way information is desired is rapidly changing. Data is expected instantly and holistically with the ability to be accessed anywhere from any device. If you look at the shift in the way organizations are engaging their customers, it should come as no surprise to stakeholders in the financial industry that they should also expect to be a part of the new data-driven revolution.

A connected financial network offers unique advantages to stakeholders based on their market position and role in solving the ultimate problem of retirement readiness:

Individual participants drive the industry to solve the need for an instant and holistic response to their financial needs. Having a holistic view of their entire financial picture will allow them to accurately see where they stand based on their personalized goals. Having a complete view will provide realistic expectations and outcomes based on all available factors from their holistic and connected financial network.

Being linked to all financial aspects of an individual, fiduciary financial advisors will now be able to provide more accurate advice, as well as offer creative solutions, to filling in gaps. Take, for example, an individual with their banking, credit cards, investments, life Insurance, and health care savings accounts all linked to a single FFA of the individuals’ choosing.

If the FFA and the individual agree they need to increase their overall saving, wouldn’t it be great for the advisor to be able to see an individual’s historical spending habits? Whether it be to redirect a portion of their payroll direct deposit or to trim back leisurely expenses, the FFA would be able to make the best possible recommendation. The advice will be that much more credible by having a holistic view and concrete evidence of the factors.

Record keepers and financial institutions allow for the ability to transmit required data to a central repository, and will provide a strategic sales advantage over those who do not provide the same capability. In an industry where very little separates competitors, record keepers and financial institutions will need to look at innovative ways to differentiate themselves.

The millennial generation, who expect this type of data to be aggregated in a single place, will be more prone to invest assets with a participating entity. This is of particular importance to this group, since it is believed that Millennials’ financial assets are projected to grow from $1.4 trillion in 2015 to $11.3 trillion in 2030, a compound annual growth rate of nearly 15 percent.

A Financial Life Network would provide a powerful set of tools the financial services industry should leverage. During a time when it as important as ever to paint the clearest possible financial picture for an individual, companies and other financial entities will want to be a part of the finished product.

Chris Eassa is with Ithaca, New York-based 401(k) technology solutions provider Envisage Information Systems.

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