‘Sobering’ report shows increasing reach of fintech over traditional firms

investmentnews.com:

Across America, people are twice as likely to know about fintech firms like Robinhood and Chime than they are to be aware of the latest services from well-established companies like JPMorgan, Goldman Sachs, Fidelity and Vanguard.

While 40 percent of US households have heard of Robinhood, and 39 percent of Chime, only 19 percent were familiar with J.P. Morgan Wealth Plan, 15 percent with Goldman Sachs’ Marcus business, 14 percent with Fidelity Go and 13 percent with Vanguard Personal Advisor Services, according to data published Wednesday by consumer research firm Hearts & Wallets.

The findings, Hearts & Wallets CEO Laura Varas said, are “sobering.”

Overall, 80 percent of people are aware of tech-enabled saving and investing services, more than double the 36 percent who knew of their existence in 2015, the firm found. However, 69 percent of people said they recognized fintech brands, versus the 59 percent that were aware of the newer services provided by traditional financial services companies.

There are some aspects of the trend that financial advisors should note, Varas said. While newer entrants to the fintech world tend to focus on saving, cryptocurrency and lending, incumbent firms spend more energy marketing their investment, planning and human-advisor services.

With interest rates at a 20-year high, cash has been the driving force for people looking for account providers, she noted.

“There is a lot of excitement and awareness around that,” Varas said. “It can be hard to fully understand. Going back to normal interest rates changes the calculus for a lot of [consumer] decisions.”

Over the past decade, “living in a zero-rate environment encouraged us to overspend,” she said. Getting rates of around 5 percent on cash