Survey participants cited a plethora of benefits in managing their finances digitally, among them:
- Saves me time (81%)
- Can conduct my financial business at any time (75%)
- Faster access to my funds (67%)
- Allows me to be more in control (47%)
- Allows me to be more responsive (38%)
Whether simply checking the performance of specific stocks or interacting with their 401(k) investments, individuals empowered by technology can take action on their money when and how they want, without relying on human support.
In essence, our survey respondents were citing the benefits of what I call the three Cs of digital finance—control, convenience, and confidence—and particularly the first two.
Broader digital adoption has positive implications not just for investors and plan participants but also for asset managers, advisors, plan sponsors, and administrators. The initial capital outlay for digital enhancements can be extensive, but it brings benefits over the long run for all parties.
Asset managers, plan sponsors, and administrators can gain efficiencies and scalability. One can even argue that there’s a fourth C for these institutions: cost savings. In Vanguard’s case, because of our mutual structure, we can pass those savings back to our clients and investor-owners.1 And by reducing the number of manual transactions that can introduce errors, technology can lower the risk of fiduciary liabilities.
Financial advisors can also concentrate on relationship management and the most complex client needs that provide the most return on investment, rather than on the more routine transactions and decisions easily addressed by apps and algorithms.
Ultimately, what benefits the individual investor also benefits the financial institutions serving them.
There are, however, obstacles to further digital adoption that are unique to financial services, and some of those involve human psychology more than digital capabilities. In other words, while control and convenience are readily apparent, the third C—confidence—has been lagging.