I attended the annual conference at Wharton and this year the theme was The Disruptive impact of FinTech on Retirement Systems.
Earlier this year I had posted a note on Blockchain that provoked a fair bit of discussion among us. The theme of FinTech continues - this time focused on a very important part of our financial lives. The very systems that help us in the long run to save enough for a comfortable retirement, when we are no longer generating income.
Both keynote speakers were intriguing. The first was Paolo Sironi who is an IBM researcher. He is the author of "FinTech Innovation - From Robo Advisors to Gamification." The other was Eldar Shafir from Princeton University and author of, "Scarcity: Why Having Too Little Means So Much."
Techs
Information asymmetry has dominated the banking industry for centuries, keeping the bank/investor liability neatly aligned - but this is changing, and understanding and preparing for the repercussions must be a top priority for wealth managers everywhere.
Sironi described the rise of financial technology, illustrating the massive changes already underway to transform wealth management into an industry that is much more efficient and client-centric discussed the changes that are yet to come.
Money managers are standing at the epicenter of a tectonic shift, as the balance of power between offering and demand undergoes a dramatic upheaval. Regulators are pushing toward a "constrained offering" norm, while private clients and independent advisors demand a more proactive role.
Sironi advised financial advisors to examine the banking evolution in detail to understand the mechanisms at work. He offered insights into what happens when established economic interests collide with social transformation. Business models are changing in profound ways, and the impact reaches further than many expect; the democratization of banking is revolutionizing the wealth management industry toward more efficient and client-centric advisory processes.
Social media, big data analytics and digital technology are disrupting the banking industry, which many have taken for granted as set in stone.
- Forces at work behind the rise of FinTech
- Depth and breadth of the new financial technologies
- How regulations are driving changing business models
- Investors may become the price-makers
We discussed business processes communicated through virtual reality and the ramification of retirement planning by creating aging photographs of ourselves.
Ticks
Eldar Shafir has closely collaborated with Nobel Laureate Richard Thaler, the inventor of the social philosophy of Nudge - i..e a programmatic way to encourage good behavior (such as savings for retirement).
This might be the most fundamental insight that Shafir shared that struck me as key about human decision making. He said, "Decisions are not about objective states of the world, but about our mental representations of those states."
That is, when we present options, we expect the recipient of the information to make an informed choice between option A and option B. But rather they make a choice based on what representation options A & B are in their head!
For example if two people are delayed in a commute, they would be equally irritable. But if one were told and praised that they were in a luxury Rolls Royce and mentioned it admiringly, they might feel differently about their delay!
Additionally our mental states are incredibly faulty.
In this picture of cars that Shafir shared, all three cars are the same size. But no matter how much you try to convince your mind, it refuses to see why the third car is not bigger than the first car!
My question to Shafir was something that has been disturbing me.
I asked him, "If we give up our decision making collectively to "nudge," we are putting a lot of faith in the persons or insitutions creating those nudges, aka, the nudgers."
I asked Shafir to resolve this conundrum.
Shafir's reply was that nudging is a tool - so like technology - neither good nor bad. But like any tool can be used for good or bad purposes. It was a safe answer, but I confess I was not satisfied. Since the bad use of such a tool will be at scale and damage caused to our society can by asymmetrical.
The "Techs & Ticks" discussion made for a worthwhile week spent at Wharton Business School in Philadelphia.
Earlier this year I had posted a note on Blockchain that provoked a fair bit of discussion among us. The theme of FinTech continues - this time focused on a very important part of our financial lives. The very systems that help us in the long run to save enough for a comfortable retirement, when we are no longer generating income.
Both keynote speakers were intriguing. The first was Paolo Sironi who is an IBM researcher. He is the author of "FinTech Innovation - From Robo Advisors to Gamification." The other was Eldar Shafir from Princeton University and author of, "Scarcity: Why Having Too Little Means So Much."
Techs
 |
| Moderating the conversation |
Sironi described the rise of financial technology, illustrating the massive changes already underway to transform wealth management into an industry that is much more efficient and client-centric discussed the changes that are yet to come.
Money managers are standing at the epicenter of a tectonic shift, as the balance of power between offering and demand undergoes a dramatic upheaval. Regulators are pushing toward a "constrained offering" norm, while private clients and independent advisors demand a more proactive role.
Sironi advised financial advisors to examine the banking evolution in detail to understand the mechanisms at work. He offered insights into what happens when established economic interests collide with social transformation. Business models are changing in profound ways, and the impact reaches further than many expect; the democratization of banking is revolutionizing the wealth management industry toward more efficient and client-centric advisory processes.
Social media, big data analytics and digital technology are disrupting the banking industry, which many have taken for granted as set in stone.
- Forces at work behind the rise of FinTech
- Depth and breadth of the new financial technologies
- How regulations are driving changing business models
- Investors may become the price-makers
We discussed business processes communicated through virtual reality and the ramification of retirement planning by creating aging photographs of ourselves.
Ticks
Eldar Shafir has closely collaborated with Nobel Laureate Richard Thaler, the inventor of the social philosophy of Nudge - i..e a programmatic way to encourage good behavior (such as savings for retirement).
This might be the most fundamental insight that Shafir shared that struck me as key about human decision making. He said, "Decisions are not about objective states of the world, but about our mental representations of those states."
That is, when we present options, we expect the recipient of the information to make an informed choice between option A and option B. But rather they make a choice based on what representation options A & B are in their head!
 |
| Optical illusion - same size cars |
Additionally our mental states are incredibly faulty.
In this picture of cars that Shafir shared, all three cars are the same size. But no matter how much you try to convince your mind, it refuses to see why the third car is not bigger than the first car!
My question to Shafir was something that has been disturbing me.
I asked him, "If we give up our decision making collectively to "nudge," we are putting a lot of faith in the persons or insitutions creating those nudges, aka, the nudgers."
I asked Shafir to resolve this conundrum.
Shafir's reply was that nudging is a tool - so like technology - neither good nor bad. But like any tool can be used for good or bad purposes. It was a safe answer, but I confess I was not satisfied. Since the bad use of such a tool will be at scale and damage caused to our society can by asymmetrical.
The "Techs & Ticks" discussion made for a worthwhile week spent at Wharton Business School in Philadelphia.
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