Important Aspects of Financial Planning in the Age of Digitalization

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As time passes by and each generation is replaced by a new one, the world changes as well. The strategies and plans that your parents or grandparents used to plan for their future may no longer be applicable today. Over the past few decades, the value of real estate has skyrocketed along with a steady rise in inflation rates. With rapid technological advancements taking place, society has found new expenses and needs. Every couple of years your new iPhone becomes a piece of redundant technology. Simply renting a place in a semi-upstate location can turn out to be more expensive than the cost of the mortgage paid by your parents or grandparents on their home purchases back in the day. But it’s not all gloom and doom. With these changing times, new opportunities have also arisen for us namely, digitalization.

The beauty of digitalization is that it not only makes things simpler but also quicker and a lot more effective. Moreover, it is ever-evolving and will likely affect several other aspects of our lives in the future. There are myriad ways in which technology benefits us and affects our lives for the better, one of which is its use in financial planning. As robo advisors, fund automation, virtual meetings, digital money, etc. gain popularity and become more mainstream, the way you conduct your financial planning also needs to be simultaneously updated and refined.

Let’s go through some of the key aspects of financial planning in the new digital economy that you must be aware of:

  1. The advent of robo advisors:
  2. To put it simply, robo advisors are digital advisors that use algorithms to offer financial advice. These advisors are not human and advise based on the information that you’ve fed into the platform. At the time of signing up, you’re asked a set of pertinent questions related to your income, budget, debt, preferred investment risk, your short-term and long-term financial goals, etc. The robo advisors would analyze your answers and recommend suitable investment options based upon your answers. You can pick from among those options making the entire process a brief, precise one free from human bias.

    Even though robo advisors offer you clear-cut advice free from bias, they lack the empathy and understanding of a human advisor. There’s more to financial planning than simply crunching numbers. Apart from coming across as cold and unemotional, robo advisors may not always assure great results and may lack the human intelligence to execute decisions promptly when things are looking bad.

    Though robo advisors may not always get great results, they’re a hit with millennials if one chooses to look at the numbers. As per a survey conducted by Vanguard, millennial investors are twice as likely to use a robo advisor as compared to older investors. Since the investment market would be dominated by millennial investors in the future, and their relative preference for robo advisors, it may be beneficial to become accustomed to them.

  3. Bitcoin and other cryptocurrencies becoming mainstream:
  4. Simply put, cryptocurrency refers to a digital currency that can be used to buy or sell goods and services similar to physical money. But they’re considered to be safer than physical currency. According to, at present more than 6,700 different cryptocurrencies are being publicly traded across the world presently. Combined, these cryptocurrencies boast a market cap of $2.2 trillion, making them highly lucrative for investors. It is believed that the value of cryptocurrencies will continue to rise to make them a valuable option of investment for investors. However, it has its detractors too, chief among them, Warren Buffet, who believes that “Cryptocurrencies have no value and they don't produce anything”.

    Though we may not be able to predict the future of cryptocurrencies, whether they’ll still enjoy the popularity which they do today, it is still important to recognize that as newer digital forms of payments pop up, such as e-wallets, bank transfers, scan and pay methods, etc., a complete transition to cryptocurrencies in place of fiat currencies may just become the new normal for all of us.

  5. Financial advice being dispensed virtually: Last year, as the entire country shut down and lockdowns were imposed across the states, the need for financial advice was felt acutely. Even though we may leave the pandemic behind us, we’re likely to stick with virtual work since it’s been so convenient for all concerned parties. Virtual financial advisors are not limited by different time zones, locations nor industries and can communicate with their clients easily. By meeting virtually, you save the hassle of setting up a face-to-face meeting and navigating through peak rush hour traffic. Not to mention you save the most valuable commodity of all - time. Advisors can easily set up a video call from home at a time convenient to both you and him/her. Rather than doing one long meeting each month, investors can meet their financial advisors for shorter durations on a weekly or fortnightly basis. The advisor can take timely actions to optimize investment returns and ensure that the investor’s financial progress is on track. Many financial advising firms are making use of chatbots and 24x7 customer care services to provide better service to their customers. This helps in reducing the turnaround time as well as speeds up customer redressals. Customers appreciate fast results which are facilitated by chatbots and virtual meetings. Another benefit of conducting virtual financial meetings is that more time is spent on taking action while reducing the time spent on planning.

  6. Financial services custom-built for you:

    The most significant benefit of digitalization in financial planning is that you can take advantage of customization. You can automate your bank account and schedule savings and payments as per your needs. Automation allows you to take care of your bills without going through the hassle of remembering the due dates along with ensuring you save a set amount every month helping curb that impulse buying behavior that you may be nursing on the side.

    Apart from this, you can use a multitude of tools such as income and spending trackers, retirement calculators, goal-based investment calculators, and more to figure out how you’re doing along with how much more you require to save or invest over a given period. With the aid of these digital tools, you can make more efficient use of your resources, make informed decisions as well as plan more strategically to achieve the desired results. Moreover, these tools have excellent efficacy. Case in point, retirement calculators are pretty accurate and juggle several parameters such as inflation, your present age, changing needs, future liabilities, etc. before calculating the amount of money you’d need before you can hang up your boots for good. The same is true for investment calculators, inflation calculators, and more. You can make an informed choice for each goal to ensure that you don’t fall short on money at the time of maturity.

  7. Lower occurrences of human errors and biases:

    Another important aspect of digitalization is that it reduces human errors or biases. All recommendations and suggestions are generated by algorithms while eliminating the chances of missed dates, payments due, etc. That’s not all. There are other benefits of digitalization too such as you can check feedback and online reviews of any financial tool before investing. Google plays its part here as most customers leave their reviews about financial advisory firms on Google Reviews. This also helps you to make informed decisions lowering the risk of fraud, the opportunity to connect with like-minded people, along with the chance to invest in financial instruments after learning all their pros and cons.

  8. Enhanced security in financial transactions:

    It goes without saying that with technology comes greater security. Digital financial transactions are comparatively a lot safer when you weigh them against physical transfers of money. Since every payment or transfer of money carries a unique digital signature, committing fraud becomes a tougher proposition. You can also track your payments and request details for older bank transactions to keep a tab on how you spent your money. With the introduction of cryptocurrency, the security levels have gone a notch higher. For example, the blockchain ledger uses mathematical puzzles making it nearly impossible for scammers to hack the system. Additionally, it is hard to make counterfeit cryptocurrencies since they are secured by cryptography (a method of securing information and communications by using different sets of codes). Furthermore, cryptocurrencies are free from any political or government interference since they are managed by their developers and not by any centralized bank.

To Summarize

While everyone may not be on board for the new digital age yet, investors need to accept that change is the only constant and that they need to adapt to newer practices sooner rather than later. The financial world is making efforts to imbue technology that will help make financial planning more streamlined and easier to manage. Digitalization also ensures more security, preservation of privacy, while making things more accessible. Though certain aspects of digitalization, such as the relevance of cryptocurrencies and the dependability of robo advisors may still be questionable, it is not feasible to completely ignore them. Therefore, keeping an open mind may serve you better and using every turn of fate to your advantage.

To know more about financial planning in the age of digitalization and to ensure you are on the right track to adapt your financial goals to the modern financial world, reach out to a professional financial advisor. Use’s free match service and answer a few simple questions about yourself and your financial needs to get matched with 1-3 financial advisors that can meet your financial requirements.

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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.