The prospect of having self-driving cars is exciting, but they will still need humans behind the wheel.
Likewise, though the wonders of financial technology can dramatically increase efficiency in an advisory practice, fintech shouldn’t start driving the operation.
“Financial technology keeps getting easier and easier to use,” says Rick Rummage, principal of The Rummage Group, an advisory coaching firm based in Herndon, Virginia.
“But when it comes down to it, many advisors overuse it and not just young tech whizzes,” he says. “Older advisors are also overusing technology.”
The advisor-client relationship can’t be built on social media, Rummage says.
"And while you can have planning programs where you punch the data in and they spit out a client plan, that can tempt busy advisors to skip the important step of meeting with them and helping them to realize what their objectives are and discussing how to stick to the plan,” he says.3
In Rummage’s view, the key to a successful planning practice is building a relationship of trust with clients, “not in beating benchmarks or creating retirement plans,” and that means keeping in personal touch with each client.
Michael Kitces, a CFP and director of wealth management at the Pinnacle Advisory Group in Columbia, Maryland, agrees, and says that advisors who try to market themselves to potential millennial clients by touting their in-house robo advisor tools, for instance, are making a mistake.
Millennials, too, want to meet with flesh-and-blood advisors, Kitces says.
He suggests using robo programs for their operational efficiencies, not for marketing to clients.
Stephen Boswell, president of the Oechsli Institute, an advisor coaching firm based in Greensboro, North Carolina, agrees that relationship building is critical but says that the process can be aided immeasurably by fintech.
For example, interactive websites and social media shouldn’t replace face-to-face meetings but can certainly supplement them, he says.
“An advisor might meet clients once or several times a year, and then stay in touch monthly on social media between those meetings,” Oechsli says.
Advisors shouldn’t get sucked into spending too much time on tech tools.
“Give yourself a daily and weekly routine, especially with social media,” Boswell says. “Maybe have a special hour during the day when you answer messages and inquiries, comment on a client’s picture posted on Facebook, etc., but then leave it for the day.”
This story is part of a 30-30 series on how technology is changing your practice.