Online advisors won't kill the financial advisory industry -- but small and medium-sized RIAs may be left for roadkill if they don’t integrate an online model with their personal service offerings.

That’s one of the takeaways from a new report on major wealth management trends by CEB, the Arlington, Va.-based corporate advisory firm.

RIAs with under $1 billion in assets under management may be particularly vulnerable to online-oriented firms such as Personal Capital that provide mobile access to advice, guidance and account information, says Wallace Blankenbaker, a senior director at CEB who helped supervise the report.

“The new models most closely replicate the RIA who uses a custodian platform, but the firms like Personal Capital are putting everything online, making it cheaper and totally transparent,” Blankenbaker says. “I don’t think the big full-service financial firms who provide private banking, lending and insurance are going to be hurt as badly -- but independent wealth managers are going to have to up their tech game.”

The report identifies a few key trends likely to reshape the wealth management industry over the next few years. Among them:


The CEB report distinguishes between the online-only services often dismissed as "robo advisors" and firms like Personal Capital that “offer an individualized advisory experience online and target mass affluent and high-net worth investors.” That latter group is the real threat, the report finds.

Integrating the online and advisor experience to keep up with the competition and better engage clients will be a critical priority for wealth managers in the years ahead, according to the report.

And don't imagine this is a youth-market challenge: A CEB survey of high-net-worth clients found that while Gen X and Gen Y clients most favor a multi-channel experience, the trend toward digital engagement “spans across age groups.”

Specifically, more than 25% of retirees and 44% of baby boomers said they were comfortable with multi-channel access to their advisory firm.

To make digital integration work, wealth managers should emphasize online tracking and explanations of how a client’s personal goals relate to market benchmarks, Blankenbaker suggests.

“You want to make the information they can see and the conversation you’re going to have as relevant as possible,” he explains. “You want the client to see their own goals online, versus just their accounts.

"Real relevancy is establishing what the client’s personal benchmarks are and how they’re doing against them.”


As regulatory burdens grow, over three-quarters of wealth management firms surveyed by CEB last year said improving client onboarding -- the process of moving data from front to back office -- is either of critical or high importance.

New record-keeping, reporting and "know your customer" rules have had significant impact on the onboarding process, the study notes. To maximize the efficiency and impact of a compliant client onboarding experience, firms must invest in automating key steps in the process such as compliance and administrative tasks, the report says.

Such automation allows advisors to spend more time on client-facing activities. That's critical, because client satisfaction with account opening is very low, according to a CEB client survey; the firm's research shows that the first six months of a client’s relationship with a firm are when he or she is most likely to expand the relationship.

Firms should centralize the process as much as possible, Blankenbaker says, and try to implement an automated signature process so clients don’t have to make an extra trip to the office.


This one should be a no-brainer -- but, ironically, because financial planning is seen as cost-inefficient by so many firms, it is probably the “least used product” among wealth managers, Blankenbaker says.

Yet it's also the most important, he adds. And things are changing, according to the report: “Shallow client relationships, low plan penetration and proven benefits from planning are leading firms to redefine financial planning from a peripheral advisory tool to the core experience for clients.”

The benefits of including financial planning for clients include a deeper relationship, more referrals and increased wallet share, says Blankenbaker.

The time-consuming nature of planning has traditionally been a “barrier to return on investment,” the report notes. However, decentralization of standard plan creation, automation, innovation in reporting and simplification of client deliverables are now making financial planning “more efficient and scalable,” according to the report.


Most wealth management firms now have star specialists with technical expertise in areas such as portfolio management or planning, the CEB report notes. Increasingly, however, those specialists will need to be more well-rounded and able to build stronger relationships through client interactions.

“The most important competency in wealth management is having interpersonal skills, not technical expertise,” says Blankenbaker. “The industry is asking specialists to play more client-facing roles and have a more collaborative and client-centric relationship with their colleagues.”

“Strong emotional competencies” are critical for specialists being asked to become more involved in relationship management, the report states.

To insure that wealth managers have emotional intelligence and are able to relate to clients, firms need to reprioritize the way they hire, train and coach employees, according to Blankenbaker.

More personality-based assessments will be needed, he says, as well as training to help wealth managers become consultative and service-oriented.

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