Four Ways Technology Is Paying Off For Advisors

The business of giving financial advice is being fundamentally changed by the growing use of technology by financial advisors. It's enabling and empowering them to do things quicker, better and more profitably.
 
Advice technology — such as a risk profiler or financial planning software — is an investment in the business. Investing wisely can see the business reaping dividends in four ways.
 
Greater efficiency and easier compliance
 
The main benefits most advisors want from advice technology are around efficiency and compliance.
 
Technology makes advisors more efficient by cutting down on the amount of work they need to do, and time they need to spend, with each client.
 
Tasks which were carried out by the advisor can now be done in other ways. For example, clients can pre-populate data and complete a risk tolerance assessment without the advisor's involvement, or market data can be electronically exchanged automatically rather than being manually keyed-in. 
 
Meanwhile, the technology helps the advisor to better explain to the client what is being recommended, and why. The data inside the system can quickly be manipulated to produce words, tables, graphs or animations to suit the client's mode of understanding. A planning business could not hope to produce these communications tools manually.
 
Technology encourages and enhances compliance as, through its processes, it requires and enforces extensive record keeping. It's also an ever-watching eye that signal an alarm when normal processes or boundaries are broken.
 
Advice firms around the world are coming under increasing regulatory loads requiring them to rigorously document their recommendations — and the process that led to those recommendations. Advice must be suitable, but that alone is not enough - everything must also be auditable.
 
For some firms — particularly large organizations — and 'end-to-end' financial planning software solution offers the best outcomes. The entire transaction can be delivered within a single environment, from know-the-client to the final recommendation report and subsequent reviews.
 
Other firms have an equally robust process built in a 'mix-and-match' style, where they can bring together best-of-breed tools to deliver the advice process. But each of those tools must be able to meet those same standards of documenting and notifying when exceptions arise. For example, a 'stand-alone' risk profiler must deliver a comprehensive report on the facts of the client's circumstances and the outcomes of their financial risk tolerance assessment.
 
The capacity of a technology-based system to 'sound alarms' in real-time is critically important.
 
The technology allows the firm to monitor and regulate the behaviors of its advisors in real time. In some cases it will prevent advisors from taking certain actions, while in others it may immediately report what has occurred to managers or compliance departments. It can also ring alarm bells to the advisor themselves — warning when an aspect of the advice might be falling beyond the client's parameters or outside of the firm's operating guidelines.
 
Higher profits
 
The immediate profit uplift from technology comes from the improvements to efficiency and compliance. An advisor supported by automation can spend less time with each client, allowing them to see more clients per day. Meanwhile, compliance is a dead-weight cost to the business so any cost-reductions feed directly into profit.
 
But there is another, less obvious, contribution to profits.  
 
Surveys have shown that advisors who embrace technology grow their number of clients by 5% more than typical advisors, while assets under management grow by 9-10% more.
 
Better customer service and outcomes
 
Technology allows firms to serve their customers more often, at negligible cost. Communications can be more frequent, more relevant and personalized. Regular reporting can be made richer and more meaningful, by reporting performance against goals and delivering information in multiple formats such as customized images, graphs and multimedia.
 
The technology encourages contact, transparency and individual understanding. It is a better experience for the client and, critically, the essential foundation for building a trust-relationship.
 
At the same time, the technology is likely to deliver better outcomes for clients because it operates consistently, predictably and without error. Even the best of us know how hard it is to meet those three standards day in, day out - client after client. We can all make a mistake or be distracted by other things — but the technology will not.
 
Improved customer engagement, retention and acquisition
 
Customers like it when firms take the time to know them properly, build a trusting relationship and talk to them often in terms they can understand. It engages them, makes them want to stay around and tell their friends about it too!
 
Unfortunately, the advice industry has a poor record of customer engagement and retention while acquisition of new costumers is a continual challenge.
 
Technology is helping advisors to change. 
 
Engagement problems have frequently traced to a lack of understanding — people simply 'switch-off' from things that they do not comprehend. But technology allows information and data to customised and personalised.
 
For example, in addition to the usual numeric reporting of performance a client might receive a personalized infographic showing how they are progressing toward their financial goals. The reporting can be online, interactive and as much, or as little, as the client decides they want - they are in more control of their financial destiny.
 
This is particularly important given the rapid extinction of physical mail. Your customers now live 'in the cloud' and expect that you will be too — with more than just the same-old paper reports you used to send by snail-mail. They expect to click and pinch and drag on the screen, as they do with their other online services. But this can't happen when all the data about their financial plan is locked inside an old-fashioned filing cabinet!
 
Clients today want to connect with you from anywhere, on any device, at any time. This is particularly true of younger clients, who have grown-up with access to everything quite literally at their fingertips!
 
Clients who are engaged and having their needs met have less reason to end their relationship with their financial advisor, whereas disengaged or unsatisfied customers are easily dislodged by competing offers. This might help explain the traditionally high churn-rate of customers in the financial advice and wealth management sectors.
 
Happy customers are also proven to talk about their happiness with their friends, providing the single most powerful marketing tool that any advisor can have - a word-of-mouth referral from a trusted associate.

Posted: 25/03/2019 12:00:00 AM by FinaMetrica