The most successful advisors of the future will crack the code to combining digital solutions with human capital to provide a more comprehensive offering to clients, which will help achieve greater scale in their practices.

In fact, in the 2015 Advisor Authority Study conducted by Jefferson National and Harris Poll, we learned that the most successful advisors are truly technology-obsessed. Advisors who manage more assets and generate more revenue spend substantially more on technology and adopt technology into their practices at twice the rate of the average advisor.

When it comes to technology, there are those in the financial advisory industry who would say that 2015 was the year of the robo. Robo advisors dominated the headlines as major online brokerage firms such as Schwab and Vanguard launched their own versions and asset managers such as BlackRock and Invesco started following suit.

Aite Group estimated that digitally driven investments would reach $53 billion by year-end 2015, up from $2 billion in 2013.

Cerulli Associates estimated that the market for robo platforms used by advisors will be close to $500 billion by 2020.

But robo advisors aren’t advisors at all. They are digital solutions to provide low-cost portfolio allocations.

And perhaps the most lasting effect that the “rise of robos” will have on our industry is helping to create the bionic advisor -- a term coined by Michael Kitces, a CFP who is a partner and director of research at Pinnacle Advisory Group in Columbia, Md., to describe the advisor who understands that technology can actually magnify the power of human capital -- not diminish it or take its place.

Just as 2015 was the year when robos pushed more advisors to confront the inflection point between human capital and technology, this will be the year when more advisors will use technology to capitalize on the vast range of data available in their practices to serve clients better. Welcome to the year of big data in wealth management.


To define big data in the context of wealth management, consider all the diverse sources available for an advisor to understand clients, their families and estates: everything from spending and investing, to assets and liabilities, business interests, and financial goals. And, beyond the financial to the personal: specific biographical and demographic details, unique preferences and important life goals.

In practice, big data is a transformation of this disparate information and disaggregated data, using computing power to efficiently identify patterns and trends. This can help advisors understand client needs and wants and allow them to serve clients and their families more holistically and retain them more effectively.

Advisors’ shift toward big data is already in progress. It has fundamentally transformed the industry and has given a competitive edge to the early adopters.

But it has been a long, secular journey of learning how advisors can best leverage big data to advance their approach to prospecting, engaging and serving clients. Through the power of big data, advisors can understand the power of demographics, understand the power of segmentation, make more informed decisions around marketing and prospecting, and ultimately attract new clients.

By leveraging big data, advisors can make more insightful decisions to enhance relationships with existing clients, create the opportunity for using more sophisticated strategies, create room for more in-depth discussions about long-term financial goals and, ultimately, gain a greater share of wallet. Using big data in these ways, we see advisors innovate, creating a better user experience on the front end and a more scalable and cost-effective process on the back end to ultimately build their practice and expand their franchise.

This requires partnering with tech providers that can enhance the traditional approach to planning and practice management with comprehensive data-mining capabilities.

As more advisors seek to harness the power of big data, it has increased the demand for data analytics and account aggregation platforms such as Quovo. It has led to several prominent transactions, from Morningstar’s acquisition of ByAllAccounts, to Envestnet’s acquisition of Yodlee last summer, to TD Ameritrade’s recent acquisition of FA Insight this year.


Now, a piece of advice: Don't miss the forest for the trees.

Big data isn’t data for data’s sake. But it is a tool to magnify value for clients and a more efficient and effective way to work.

Advisors may be inclined to look at an individual client or a specific point in time, but the real power of big data is the big-picture view that it can provide.

One client and one data point is one tree. Many clients and many data points make a forest.

By viewing clients and data in aggregate advisors can identify the actionable trends in a way that allows a view of the whole forest, to help it grow and prosper and protect it from going down in flames.

So don’t be left behind in this year of big data. Learn from the early adopters.

Advisors should use it to their advantage.

Big data allows advisors to better understand and manage the market and better manage and build clients’ wealth and the practice.

And this much is crystal clear: Advisors won’t be replaced by technology or eliminated by big data. As clients accumulate more wealth and their financial lives becomes more complex, nothing can replace the value of guided advice.

Clients need that human touch to guide them through periods of growth and periods of volatility. They need the human capital that can survey all the inputs and reach the right conclusion.

And the last thing they want is to call a robo and get a busy signal.

Mitchell H. Caplan is chief executive of Jefferson National.

This story is part of a 30-day series on smart ways to grow your practice. It was originally published on Feb. 17, 2016.

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