As our world becomes increasingly digital, it’s only natural that financial management follows suit. With the world seemingly grinding to a halt during the last several months, many people were left reconsidering their traditional banking and investment institutions. Due to the growth of technology and its many benefits, online financial management has never been easier. Keep reading to learn how online options set themselves apart from traditional financial management, and the many benefits of making the switch.
Ease of Accessibility
Perhaps the most stark contrast between traditional and online financial services is the ease of accessibility. No longer is there a need to meet with a banker or financial advisor in person in order to service your needs. Many traditional offerings have tried to keep up with the push for greater technology, but in some cases they still lag behind.
In fact, many Americans live in geographic areas that don’t even have reasonable access to traditional financial services. A banking desert is an area that doesn’t have a single bank location with 10 miles—and they’re only becoming more common year after year in America, especially in rural areas. Yet, with access to the internet through a smartphone or computer, people can now access online banking, retirement, and investment services from anywhere.
Rather than having to set up appointments to meet in person and deal with long waiting periods for financial moves to take effect, digital services allow you to make investment decisions and move money around in a matter of minutes. For example, just by answering a few questions about your finances, you can get retirement plan recommendations without even meeting an advisor.
For a multitude of reasons, online financial management can be much cheaper than traditional offerings. And when it comes to managing your money, the last thing you want to do is spend more of it than you need to.
Take, for example, the rise of challenger banking in the United States. Because completely online financial institutions don’t have to pay for the associated costs of brick and mortar locations, they can usually offer banking with no hidden fees or better interest rates. Unfortunately, Americans are charged hundreds of dollars every year in banking fees such as overdrafts, monthly service charges, and foreign transaction fees by traditional options.
Investment and retirement plans, on the other hand, work in a similar way. Financial advisors can charge for their services in several ways—sometimes as an hourly rate or as a percentage of the total investment cost. Another way they make money is by a commission on your investment. Either way, it can put serious doubt into the decision-making progress and whether or not you’re getting advised on truly the best options.
Online investment services could offer you better pricing. By choosing an option (like blooom) that charges a low flat fee and is held to a fiduciary standard you can be sure that your recommendations are in your best interest. You won’t be pushed to make choices that will benefit an advisor and you won’t be gouged for more money down the line. Those that are not fiduciaries are not legally required to act in the user’s best interest.
Finally, one of the best benefits of online financial management is that you can customize your experience to be extremely personal. Many softwares allow you to create a custom view of your finances, which lets you get a broad overview of your portfolio, as well as access to chat with a financial advisor.
And with all of this personalization, it’s important to make sure that your personal information is kept safe and secured. Many online financial services offer the same amount of protection as traditional services, but some even go above and beyond. Some digital banks and retirement services offer instant notifications for unusual activity. Whereas you may not notice fraudulent activity until you receive a traditional statement in the mail, online institutions can send you a text message right away when something seems wrong.
In closing, there’s a multitude of reasons why you may opt for online financial management. The ease of accessibility for your online accounts, the ability to save more money, and a completely personalized plan are just three reasons out of many. Make sure to take a hard look at your current financial situation, and then consider these options when looking for room to improve.
DISCLAIMER: The information is provided for discussion purposes only and should not be considered as advice for your investments. Investing involves risk. Your investments are subject to loss of principal and are not guaranteed.
Published on July 1, 2020