Each day, technology continues its steady advance on a traditional financial advisor’s world.
According to a recent study by Scottrade Advisor Services, 90% of respondents said that robo-advice will affect the wealth management industry, citing factors such as fewer prospective clients to compressed fees and new client interaction models.
Many of these advisors also said that Generation Y is likely to use robo-advisory services in large numbers.
To address the challenges of an increasingly digital advisory world, new software aimed at helping advisors automate and get online is coming to the market. (Full disclosure: I am the founder and chief executive of Wealthminder.com, a provider of financial planning and investment advice software).
But, of course, businesses of all sizes have budgets, and smaller firms may have even tighter limitations. So, how do firms survive and even thrive in this new era?
1. Focus on areas of the practice where technology will provide the most efficiency.
Here are a few ideas:
- Collect data from customers through an online portal.
- Automate the account-opening and asset transfer process.
- Let software do the heavy lifting for the initial portfolio review, including held-away assets.
- Use alerts to notify the firm of problems or opportunities instead of logging into accounts one by one.
- Have technology follow up with clients on the recommendations made to them.
2. Use software that allows clients to interact on their terms.
Give clients tools to enter and review information when and how they wish. Let them communicate through e-mail, video conferencing, text and other electronic means.
Be available to them electronically outside traditional “office hours.”
3. Provide an online user experience that meets clients’ expectations.
The reason that Apple is the most valuable company on the planet is that the user experience of its products is second to none. Simply having the capabilities online isn’t enough.
4. Carefully consider how the firm selects tech vendors.
Pick vendors who understand technology. Domain expertise is important, but understanding technology will allow them to apply lessons already learned in other industries.
Consider using software as a service (SaaS) products to reduce internal information technology support costs and to get the latest and greatest innovations immediately.
Look for entrepreneurial/budget-friendly business models such as flat fee pricing per customer. This way, advisors only pay once they get paid, and they only pay for what they use, thus greatly reducing downside risk.
Times are changing, but the change doesn’t have to be a negative. For forward-thinking advisors, online advice represents an opportunity to expand their services to the 100 million households that they can’t or don’t serve because of insufficient assets to make a traditional relationship work.
Rich Ellinger is founder and chief executive of
This story is part of a 30-day series on leading tech trends for advisors. It was originally published on July 21, 2015.
